Why Are Gas Prices Going up Again? The Answer Isn’t Simple

Key takeaways

• Gas prices have increased 8% in the last month, according to new data
• A mixture of global and domestic factors have led to causing the climb in price
• Thankfully, the squeeze looks to be a temporary one

U.S. gas prices are on the upward trend. It’s nowhere near as bad as last year’s eye-watering price per gallon, but a few unfortunate factors have led to gas prices climbing 8% in the last month alone. Is it a temporary blip or the start of a long-term trend? Here’s what we know.

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What’s happening with gas prices?

While we’re not anywhere near the insane gas prices of last year, and drivers have enjoyed some relief over the summer, it unfortunately looks like gas prices have been on the rise again in recent weeks.

According to new data from AAA, the price of a gallon of gas has jumped 8% in the last month to reach around $3.80. California and Washington, which have the highest gas prices of any state, see an average gallon cost of more than $5.

It’s difficult to pinpoint one sole cause as the determining factor. Record-breaking temperatures across the U.S. and Latin America have forced oil refineries to reduce their output, as many can’t operate past 95 degrees. This has put a strain on gas supplies.

Crude oil prices are also to blame, as Russia and Saudi Arabia decided to cut their oil production from August onwards. When the cost of crude oil rises, gas prices tend to follow. And it’s summertime, so people travel more, creating a supply and demand issue.

Could they come down again?

Saudi Arabia has indicated that its crude oil production cut is only temporary and should finish by the end of September, which could relieve gas prices. However, a new policy from OPEC+ to limit output and tighten supply has caused Brent crude oil prices to climb 11% in the last three months.

The fall will bring cooler weather, which should help the U.S. crude oil production situation. But on the other hand, prices are set on a global market scale, so any drop may not be felt immediately.

Overall, it looks like a temporary situation rather than a significant long-term trend in gas prices.

The bottom line

While there are indications that this price hike might be temporary, with potential relief on the horizon, the global nature of the oil market means any decrease might take time. Hang in there, folks.

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