[ad_1]
After months of decline, U.S. gasoline prices are stuck at just over $3 a gallon, according to AAA.
As of January 22, the national average gas price was $3.07 per gallon, and 29 states had pump prices below $3. Gasoline prices have been on a downward trend since September, dropping more than $0.80 per gallon from the peak price of $3.88 in September.
“We don’t believe the national farm average will reach $3 a gallon, even if it’s even close to that,” AAA spokesman Andrew Gross said in a recent statement. “Due to the mid-winter anomaly, pump prices are likely to move up or down by a few cents for some time. However, as frigid temperatures could impact refinery production and push up pump prices in some regions, ,be careful.”
The last time the national average gas price was below $3 was in May 2021. Gasoline prices rose briefly in December to average $3.12 per gallon on increased holiday demand and higher oil prices, before falling again.
What determines the price of gasoline?
According to the Energy Information Administration (EIA), more than half of the price consumers pay at the pump comes from crude oil. Oil demand and production targets set by the largest oil producing countries, including the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+), play a key role in gas price fluctuations.
Gasoline prices have held steady despite a rebound in oil prices earlier this month that erased some of the losses.
West Texas Intermediate (CL=F) crude oil futures rose again on January 18 to around $74.08 per barrel, while Brent crude oil futures (BZ=F) also rose. These moves come as the latest EIA data shows an unexpected increase in US crude oil inventories, potentially indicating a softening in demand.
Recent events, including Russia’s decision to stick with oil export cuts, have put upward pressure on oil prices. Protests in Libya further curtailed production after activists forced the country’s National Oil Company to shut down the El Sharara oil field, which produces up to 300,000 barrels of oil per day.
Meanwhile, continued attacks on ships in the Red Sea by the Iranian-backed Houthi rebels are another wild card for oil prices in 2024.
The Houthis have targeted more than 23 commercial ships in recent months, according to shipping data platform Freitos Terminal. Concerns about escalating conflict in the Middle East have also led energy companies to delay or reroute oil shipments.
At the same time, oil prices are not the only factor pushing up gasoline prices. Seasonality, refining capacity, and distribution also affect prices.
Gasoline inventories soared to a one-year high, highlighting weak demand, the EIA said. Winter is a season when gasoline sales are slow as snowstorms and cold weather affect driving habits.
State and federal gas taxes also affect the overall cost of filling. In California, which has the highest gasoline tax, the tax adds up to $0.51 per gallon of the total price, while in Alaska you only pay $0.09 per gallon.
Additionally, gas prices serve as a barometer of how consumers feel about the economy, factoring into elections and contributing to the larger inflation story that prompted the Federal Reserve’s latest interest rate hike campaign.
For the latest stock market news and in-depth analysis of price-moving events, click here.
Read the latest financial and business news from Yahoo Finance
[ad_2]
Source link
