Gas prices are on the rise again, thanks to the highest oil prices in seven years, and industry analysts say they could go higher because of imbalances between supply and demand due to COVID-19.
The average price for a gallon of gasoline is $3.25 per gallon, according to GasBuddy, an application and website that provides users gas prices at nearby gas stations.
The average price is $1.08 higher than it was a year ago.
Prices jumped this past week when OPEC said it would not boost oil production in the middle of a global shortage caused by deep production cuts at the height of the COVID-19 pandemic.
“We can thank just about everything that we’re seeing now on the fact that COVID stifled consumer demand long enough that it caused prices to collapse, which caused production to collapse,” said Patrick De Haan, petroleum analyst for GasBuddy.
Oil companies reacted swiftly last year when the pandemic sharply reduced demand for gasoline, which sent oil prices plunging.
“They did so by cutting production and laying off tens of thousands of workers who, now in many cases, have moved on to other areas and received jobs elsewhere, so this is simply like many things in the last year induced by COVID and made a challenge by tight labor markets,” De Haan said.
Fuel prices are expected to continuing rising.
“Unfortunately oil prices may continue to advance as long as we are at this imbalance of supply and demand and it looks like that could persist,” De Haan said.
The most common U.S. gas price is $3.09 and the average cost among the highest price gas stations in the country is $4.20 per gallon, according to GasBuddy.
