Gas Prices Could Rise 20 Cents a Gallon by August
High demand and a lack of a deal among oil producers to raise production are contributing to the increase. AAA expects prices to rise as much as 20 cents a gallon by the end of next month.
Gas prices are expected to keep climbing through August.
July 6, 2021, 11:57 a.m. ET
The price of a gallon of gas
Note: Weekly prices through June 28. Data is not seasonally adjusted and includes all formulations of regular gasoline.
Source: Energy Information Administration
By The New York Times
AAA said on Tuesday that gas prices were expected to increase another 10 to 20 cents through the end of August.
The average price of a gallon of regular in the United States has risen to $3.13, according to AAA, up from $3.05 a month ago. A year ago, as the pandemic kept people home, a gallon of gas cost just $2.18 on average.
The rise comes amid a breakdown in talks among OPEC and its allies over whether to expand oil production as travel resumes and global demand recovers. The cartel has been unable to reach a deal despite multiple meetings since Thursday.
“Robust gasoline demand and more expensive crude oil prices are pushing gas prices higher,” Jeanette McGee, an AAA representative, said in a statement. “We had hoped that global crude production increases would bring some relief at the pump this month, but weekend OPEC negotiations fell through with no agreement reached.”
Scott Hanson of Western Springs, Ill., remembers when $40 was enough to fill up his gas tank last year, when he lost his job as an office manager due to the pandemic. Now, Mr. Hanson is paying over $60 to fill his Dodge Charger, making his trips to take his mother to her doctor appointments more expensive. Gas in Illinois is averaging $3.36 a gallon, according to AAA.
“It’s too much for too many people that lost their jobs or have low-paying jobs,” Mr. Hanson said. “Everything bad that could happen is happening all at once.”
Washington has seen one of the biggest spikes, with the price of regular gasoline rising 20 cents in the past month to $3.81, according to AAA. In California, which generally has some of the highest gas prices in the country, a gallon goes for $4.31.
Crude oil fell off its recent highs on Tuesday, with West Texas Intermediate, the U.S. benchmark, down more than 2.5 percent to about $73.15. But even prices at that level have not been reached since 2018, and they are far above the prices from early in the pandemic, when the price of a barrel hovered around $40.
As travel ground to a halt early last year, Russia, which is part of the group of allied oil producers known as OPEC Plus, refused to cut production, sparking a price war with Saudi Arabia, the de facto leader of OPEC, that helped drive prices to rock-bottom. Oil-producing nations finally agreed to cuts and have been operating mostly in lock-step for months, raising output slowly to keep prices high.
But the conciliatory nature of the agreement seems to have stalled, with OPEC Plus failing for days to come to a decision on production, and oil prices have fluctuated as traders await a result.
Gas prices have also been volatile as the economy has reopened. With a jump in travel already adding upward pressure, a cyberattack in May on a gas pipeline that provides nearly half of the East Coast’s fuel supplies led to panic buying, shortages in some areas and a temporary spike in prices.
Americans are also keeping a close eye on Tropical Storm Elsa, which is headed for the Gulf of Mexico and parts of Florida. The storm is unlikely to cause disruptions to Gulf Coast crude and gasoline production as winds recede, according to AAA.
Mahsiah Waites of Atlanta, Ga., uses her vehicle over six hours a day as part of her job as an assistant for a fashion designer. Ms. Waites is grateful to be employed and able to afford the spike in prices, but she is starting to feel the pain of having to pay nearly $55 to fill up her tank.
“I love my car, so I’ll stick to it and take the situation as it is,” Ms. Waites said. “If things get too rough, I’ll have to cut back on driving or some other area I spend money on.”
Many major automakers have committed to phasing out conventional cars in favor of electric vehicles over the next decade and have promised lower ownership costs, including savings on gas. But even without the annual summer surge in gas prices, electric car drivers may not be home free, according to Tom Kloza, the head of global energy research at Oil Price Information Service, which tracks energy prices.
“I think there will be some people that will opt for E.V.s, but they want to see the electric grid behave efficiently during the tremendous heat of the summer,” Mr. Kloza said. “If we have hurricanes that knock out electricity for a period of time this summer, that may haunt the adoption of E.V.s.”