Normally, prices at the pump cool off as the summer winds down. Not this summer.
For a variety of reasons — including OPEC holding back supply and extreme heat that has messed with refineries — gas prices have steadily increased this summer. The national average price for regular gas stood at $3.58 a gallon on Memorial Day, the unofficial start to summer.
“This is abnormal. Prices normally fade towards the end of the summer,” said John LaForge, head of real asset strategy at the Wells Fargo Investment Institute.
Eleven states across the country average $4 a gallon or more, according to AAA. That includes Illinois, Washington, Arizona and California.
The good news is that gas prices are still well below the peak set in June 2022. At that time, fears about supply disruptions in Russia sent oil prices skyrocketing, lifting the national average price for regular gas to a record of $5.02 a gallon.
Gas prices fell sharply from those levels as Russia disruptions failed to emerge and the Biden administration aggressively drained emergency oil reserves.
Analysts blame the heatwaves as well as heat-related power blackouts for causing outages at multiple refineries. Those have limited how much gasoline (and diesel and jet fuel) refineries can produce at a time of seasonally strong demand.
The latest data from the US Energy Information Administration shows that Gulf Coast refiners only operated at 92 percent of capacity last week.
“They’d like to run at 100 percent. They have the economic incentive to run at 100 percent. They just can’t because of the heat,” said Lipow.
Psychologically important prices
It’s worth noting that while gas prices are high for this point of the calendar, these figures aren’t adjusted for inflation.
On a real (inflation-adjusted) basis, monthly gas prices were well above $4 a gallon late in the summers of 2011-2014, according to the EIA.
Still, consumers are very sensitive to increases in gas prices, in part because of how visible they are. Many people view the price of gas as a key economic barometer.