Analysts are warning U.S. motorists to brace for a significant spike in gasoline prices in the upcoming weeks, driven by major refinery outages that have slashed supplies ahead of an expected seasonal surge in demand.
The national average price for a gallon of gasoline has surged over 9% since the beginning of the year, hovering around $3.40 as of March 8, marking the highest level since early November, according to data from the motorist group AAA.
The recent increase in gasoline costs has contributed to a notable rise in consumer prices, further fueling concerns about inflation in the U.S. This development is poised to become a focal point for both Democrats and Republicans in the run-up to the presidential elections scheduled for November this year.
With U.S. gasoline stockpiles plummeting by 5.7 million barrels to 234.1 million barrels in the week ending March 8, and currently trailing their five-year seasonal average by over 2%, experts anticipate a continued upward trajectory in gasoline prices.
Tom Kloza, head of energy analysis at Oil Price Information Service, emphasized that various factors, including heightened summer travel demand, diminishing fuel inventories, and refinery challenges globally, are likely to propel gasoline prices even higher in the near future.
Amidst this backdrop, total U.S. refinery utilization rates have persistently remained below 87% for eight consecutive weeks, marking the lengthiest such period since 2021. Research firm IIR Energy projects that approximately 1.2 million barrels per day (bpd) of the total U.S. refining capacity of around 18 million bpd will be offline this week, with an estimated 885,000 bpd set to be offline next week.
Recent Ukrainian drone strikes targeting Russian refineries have further exacerbated supply concerns, contributing to the escalation in fuel and crude oil prices. Prior to these events, oil prices were already on an upward trajectory due to extended supply cuts implemented by the Organization of Petroleum Exporting Countries (OPEC) and its allies.
In response to these developments, the Energy Information Administration (EIA) revised its retail gasoline price forecast for this year upwards by 20 cents to $3.50 per gallon on Tuesday. U.S. crude oil prices surged by $2.16 on Wednesday to settle at $79.72 per barrel, while Brent crude prices rose by $2.11 to reach $84.03 per barrel.