Gas prices are on the rise again, reaching the highest level since October at $3.88 per gallon, according to AAA.
Although it’s much lower than the peak of $5 per gallon in June 2022, it is still higher than historical averages.
The price of gas has increased by around 20% since the beginning of the year and over 8% since June 1.
High gas prices present challenges for elected officials, consumers, and policymakers at the Federal Reserve.
Gas prices are primarily influenced by the price of oil on commodity markets, which can be affected by various factors.
Recent increases in crude oil prices can be attributed to Saudi Arabia and Russia cutting production, China’s continued oil imports, and reduced refinery production capacity due to hot weather.
The Strategic Petroleum Reserve, tapped by President Biden to lower prices, is currently low and restocking will likely be delayed until prices decrease.
However, gas prices may come down in the fall as demand decreases and a cheaper blend of gasoline is used.
The projections of a slower global economic growth in 2024 also indicate a decrease in oil demand and gas prices.
Analysts suggest that the production cuts from Saudi Arabia and Russia may not continue into the new year, potentially relieving the pressure on gas prices.
Overall, it is expected that the current oil market situation has achieved its goals and the need for prolonged production cuts is limited.