Fuel costs: Nationwide common jumps to 2-month excessive

Fuel costs within the U.S. are steadily rising once more, leaving prospects of a $3 nationwide common within the rearview mirror.  As of Feb. 15, the nationwide common gasoline worth stood at $3.28 per gallon, up $0.12 from per week in the past, in accordance with AAA knowledge. 

A shutdown on the giant refinery in Indiana that usually processes 435,000 barrels of crude per day has impacted costs within the Midwest and pushed up the nationwide common. 

Larger oil costs and up to date drawdowns in gasoline stockpiles have additionally put upward stress on gasoline prices for drivers throughout the U.S.

Whereas the nationwide common continues to be about $0.14 decrease than a yr in the past, some states have have seen outsized upward actions not too long ago. Costs on the pump jumped a median of $0.19 or extra over the previous week in New Mexico, West Virginia, Colorado, Maryland, Virginia, and Illinois. 

The markets with the most costly gasoline embody Hawaii at $4.70 per gallon adopted by California at $4.65 per gallon. 

“We’re in that point of yr the place pump costs start to warmth up, normally peaking round July,” AAA spokesperson Andrew Gross stated not too long ago.

“However until one thing shocks the worldwide oil market and causes costs to spike, the nationwide common for a gallon of gasoline will most likely stagger greater, with some flat days and even small worth dips alongside the way in which.”

The gasoline nationwide common had been in a downward development from its September 2023 peak of $3.88 per gallon. A few month in the past, the common pump worth hovered close to a one-year low of $3.07. The final time the nationwide common gasoline worth fell under $3 was in Could 2021. 

Learn extra: The very best cash-back bank card for gasoline stations for February 2024

What determines the value of gasoline?

Greater than half of the value customers pay on the pump comes from crude oil, in accordance with the Power Info Administration (EIA). 

Oil demand and the manufacturing targets set by the most important oil producers, together with the Group of Petroleum Exporting International locations (OPEC) and its allies (OPEC+), play an vital position in gasoline worth fluctuations.

Fuel costs have climbed greater as crude oil costs surged in current weeks.

Crude oil futures for West Texas Intermediate (CL=F) closed above $78 per barrel on Feb 15. Brent (BZ=F) , the worldwide benchmark worth, surpassed $82 per barrel. These strikes partly replicate easing issues of oversupply after the EIA lowered its U.S. manufacturing forecast for 2024.

Geopolitical dangers have additionally put upward stress on costs. Ongoing assaults in opposition to vessels within the Crimson Sea by the Houthis, an Iran-backed insurgent group, have turn out to be a wild card for oil costs in 2024. The assaults by Houthi rebels have prompted vitality and cargo firms to keep away from the Crimson Sea area that connects to the Suez Canal, a vital pathway between Asia and Europe.

Tensions within the Center East have solely escalated over the previous month because the U.S. and UK performed retaliatory strikes in opposition to Houthi-controlled areas in Yemen, Israel rejected a Hamas ceasefire proposal, and the U.S. killed the commander of an Iran-backed militia following a lethal assault on an American army base.

On the similar time, crude oil costs aren’t the one issue driving gasoline costs. Seasonality, refining capability, and distribution additionally affect costs. 

In January, gasoline inventories surged to the very best stage in a yr, in accordance with the EIA, however have since come down as demand for gasoline elevated. February snowstorms and chilly climate in the course of the seasonally gradual winter season, nevertheless, may nonetheless affect driving habits within the coming weeks.

State and federal gasoline taxes additionally contribute to the general value of filling up. In California, the state with the very best gasoline tax, taxes add as much as $0.51 of the general worth per gallon, whereas drivers in Alaska pay simply $0.09 per gallon. 

Moreover, gasoline costs act as a barometer for a way customers really feel in regards to the economic system, issue into elections, and contribute to the bigger inflation story that prompted the Federal Reserve’s newest rate of interest hike marketing campaign.

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