Recent gas price hikes could be related to high oil prices and shortages in refineries.
On July 6, the average price for a regular gallon of gas in Texas was $3.13, but that number has increased to $3.48 just one month later, according to AAA.
Matt Smith, an analyst at Kpler, said that the increasing cost of oil is one of the biggest reasons for the growing cost per gallon.
“And so oil prices have rallied about 20% over the last month or so — so that WTI, that U.S. benchmark, going from just under $70 to over $80. And the rule of thumb is that a $10 rise in the price of a barrel of oil equates to about $0.25 increase at the pump,” said Smith to the Texas Standard.
Smith added that refinery outages and limited inventory are other factors contributing to increasing prices.
“So we’re passing through the peak of refining activity to meet that summer driving season … that peak of demand there. But we’ve had some refinery outages; inventories are lower,” he said.
Tom Kloza, global head of energy analysis at Oil Price Information Service, said higher temperatures also put a strain on the refineries.
“We are seeing refiners in Texas, Louisiana, Tennessee and some other states struggle to run anywhere near at maximum rates,” said Kloza, per USA Today. “Petroleum engineers can tell you that when ambient temperatures get to the 100-degree neighborhood, it is difficult to run at maximum levels.”
Oil and Gas 360 reported that refineries were operating at 92.7% capacity as of July 28, while total commercial petroleum inventories decreased by 10.4 million barrels compared to the week before.
Moving forward, it is currently unclear whether prices will begin to decrease.
Ed Hirs, professor of energy economics at the University of Houston, said he does not expect much change in the market.
“I expect to see the price stay firm into the fall as we switch off from the summer blend and go to the winter blend, which is a little less expensive,” he said, according to Houston Public Media.
Kloza, however, is more optimistic that prices could decrease depending on a couple of factors.
“There is the fear of more refinery downtime along with the major fear of a hurricane probability cone in the Gulf of Mexico,” Kloza said, per USA Today. “If those fears are removed, we will see substantial gasoline price drops, even if crude oil remains above $80 per barrel.”
