Gas prices: 'Stark increases' expected amid 'stunted' refineries, higher oil
Gasoline prices have seen sharp increases amid recent refinery constraints and higher oil prices.
The national average at the pump sat at $3.35 per gallon on Monday, up $0.09 from a week ago, but still $0.05 lower from exactly one year ago, according to AAA data.
"US refining has been stunted by severe weather and some power losses at key plants. We may in the next few days see US retail gas prices at a higher number than year-ago," Tom Kloza, global head of energy analysis at OPIS, told Yahoo Finance.
In December, 24 states across the Midwest and Gulf Coast had their averages sitting below the $3 level. On Monday averages in just nine states were sitting below that threshold.
A major BP refinery in Indiana with the capacity to process 435,000 barrels of crude a day was forced to shut down in February to deal with the impacts of a plant-wide power outage. Reuters reported the refinery is expected to return to full production this month.
The average cost of gasoline in Indiana and neighboring Illinois sat at $3.73 and $3.42 per gallon, respectively, on Monday.
The Midwest isn't the only region facing increases.
"Some very stark increases are coming in western states, and we've seen gas prices rally by about $0.25 per gallon, even as demand has been suppressed by inclement weather," Kloza added.
California prices were averaging $4.83 per gallon on Monday, up from $4.64 one week ago.
“This is the time of year when we tend to see more bumps in the road ahead with rising gas prices, all of that really due to the seasonal ups and downs,” GasBuddy head of petroleum analysis Patrick De Haan told Yahoo Finance Live.
"Right now, the ups: Refinery maintenance, a more costly summer version of gasoline coming into view, and rising demand all set the stage for gas prices that could rise another $0.20 to $0.50 a gallon between now and, say, Memorial Day," he added.
On Friday US crude futures surged above $80 per barrel for the first time since November.
West Texas Intermediate (CL=F) was trading just below the $79 level on Monday while Brent (BZ=F) fell to trade below $83 per barrel.
Crude dipped despite an agreement by oil alliance OPEC+ to extend output cuts of 2.2 million per day into the second quarter. Expectations that the cartel would continue with the reductions had lifted contract prices in prior sessions.
Crude futures have been on an upward trend, gaining for two months in a row.
"I think the rally in crude oil prices is on the expectation that OPEC+ will continue with their voluntary production cuts well into the second quarter of 2024," Andy Lipow of Lipow Oil Associates told Yahoo Finance on Friday.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
