According to a statement from the U.S. Energy Information Administration (EIA) on Thursday, the average retail price of regular gasoline in the United States has surged by 6% in the last five weeks leading up to the Labor Day weekend.
On the Monday preceding the Labor Day weekend, which was August 28, 2023, the average retail price for regular gasoline stood at $3.81 per gallon throughout the United States. This recent increase of 6%, equivalent to $0.22 per gallon, can be attributed to a combination of factors, including oil production reductions by Saudi Arabia, limited inventories of gasoline within the U.S., and the announcement of maintenance plans for refineries in the U.S. Northeast.
Recent reductions in oil production
After adjusting for inflation, the retail gasoline prices leading up to this Labor Day weekend were 4% lower compared to the prices preceding Labor Day in 2022, according to the EIA’s Gasoline and Diesel Fuel Update.
Recent reductions in oil production by major OPEC+ producers, including Saudi Arabia, have caused international crude oil prices to rise significantly. These prices constitute the largest component of gasoline prices in the United States.
Additionally, lower-than-usual gasoline inventories and instances of refinery outages within the United States have placed upward pressure on gasoline prices throughout the summer, as highlighted by the EIA.
Unforeseen refinery disruptions
Furthermore, planned maintenance at two refineries—one in Canada and another in Pennsylvania—from mid-September to mid-November is anticipated to keep gasoline supplies constrained, especially in the Northeastern region, as per the administration’s observations.
Unforeseen refinery disruptions caused by record-high temperatures in the South have also played a role in a nearly 35-cent increase in gasoline prices so far this summer, according to the fuel-savings app GasBuddy.
GasBuddy noted that while gasoline prices have begun to moderate as summer draws to a close, there could still be one last price increase at the pump before a decrease in the fall. Patrick De Haan, head of petroleum analysis at GasBuddy, stated that if there are no unexpected oil production cuts or hurricane-related disruptions, a surge in gasoline prices can be avoided. He expects the decline in prices to accelerate as we move into late September, with gas stations transitioning to cheaper gasoline.