On average around the DC area drivers are paying $4.43 cents for a gallon of regular gas, which is the highest recorded average price for the region according to AAA.
Tom Kloza, Global Head of Energy Analysis at the Oil Price Information Service said some of what is being seen is part of a movie that we have seen before, which is the annual chasing of gasoline prices by trading companies ahead of Memorial Day, but this time around that is not the only thing impacting prices.
“This year it’s exacerbated by Putin and Russia and the likely sort of de facto boycott of some Russian fuel, some of it crude oil, some of it diesel and some gasoline,” Kloza told WTOP’s Hillary Howard and Shawn Anderson.
On Tuesday, the national average for a gallon of regular unleaded was $4.34 according to AAA, but Kloza said tomorrow that national average could hit $4.40. He does though expect a slight cooling down of prices in the coming days, though what the summer has in store remains unclear.
“July and August are anybody’s guess,” Kloza said.
Kloza said in February and March the price rise for gas was based on the cost of crude oil, but now oil refineries which convert crude into gasoline are to blame. He said COVID closures of some refineries, damage from Hurricane Ida to others last year and the recent closure of a refinery in Louisiana, are impacting the prices we are seeing now.
“The price of gasoline and more specifically diesel and jet fuel has just become extra orbital,” Kloza said.
According to Kloza the margins being seen, which refiners are making have “not been seen on the planet before.”
Kloza doesn’t believe $4.40 a gallon will become the new norm, but he said the days of paying well under $3 a gallon may be over.
“I think it’s the new average for the foreseeable future,” he said.
To see a steep decline in prices, he said you’d have to wake up and find out that Russian President Vladimir Putin is no longer in office. Another event which could trigger a big fall, a recession in the United States.
“You know, one is an eventuality, I think a lot of people would like to see the other one would create a lot of pain in the bank accounts in the 401k’s,” he said.
He said by next year, having some additional international sources for oil and gas.
“There’ll be some huge Middle Eastern refineries, a big refinery in Nigeria, and that may tilt the balance so that you’re not seeing gasoline trade for $50 above crude or diesel, which is really unmoored and is over $6 that a lot of states,” Kloza said.
