July 31 (UPI) — Apart from the general spike in commodity prices that’s elevated retail gasoline prices, the U.S. heat wave may be limiting refinery production and supporting higher prices at the pump, data show.
The price at the pump barely moved during the weekend. Travel club AAA listed a national average retail price of $3.76 per gallon for Monday, only a fraction of a percent higher than Friday’s average, but 22 cents per gallon higher than this time last month.
Much of the recent spike in the price at the pump has to do with increased travel demand during the summer and trending higher crude oil prices. Crude oil prices account for the bulk of what consumers see at the pump and, at $85 per barrel for the global benchmark Brent, prices are nearly 14% higher from the start of July.
On the crude oil side, production restraint from the likes of Saudi Arabia is supporting higher prices and the market may be running at 2 million barrels per day less than what demand indicators would support.
Andrew Gross, a spokesman for AAA, said recently that demand for road fuels was a bit tepid relative to a year ago because of the recent heatwave. In the U.S. market, prices may be getting further support because of refinery issues.
While “the heat may be keeping some folks home, it also suppresses refinery production, according to experts,” he said.
An excessive heat warning is in place for much of Louisiana, with the “feels like” temperature expected at 113 degrees Fahrenheit on Monday. One of the larger refineries in the U.S. south, Exxon’s facility in Baton Rouge, La., may be offline for several weeks after an unplanned outage was reported last week.
Louisiana gas prices stood at $3.35, up 15 cents from a week ago and 27 cents higher than this time last month.
A mid-July forecast from the Energy Information Administration, the statistical arm of the Energy Department, put the national average at $3.40 for the year, down 57 cents from the 2022 average.
