Gas prices are on the rise again. Here's where experts say they are going next.
Budget-conscious motorists may want to fill up sooner rather than later, as prices at the pump are likely headed higher in the near term.
The approach of the peak driving season and the annual switch by refineries to more costly summer gasolines has driven up the national average for unleaded to $3.63 as of Monday, according to AAA.
Prices have been edging higher, with motorists on average paying nearly four cents more per gallon than a week ago and almost 20 cents more this time last month. Still, the cost of filling up is iin line with where motorists and their wallets stood a year ago, when a gallon of unleaded came to $3.67, AAA data shows.
"They are following a similar pattern to last year — maybe they rose a little quicker" due to the global conflicts roiling the oil patch, as well as a bump in demand due to people driving to prime viewing spots to see the solar eclipse, Andrew Gross of AAA told CBS MoneyWatch.
"This is a weird time because we have two wars going on, and the oil market is very wary of that," said Gross. "The oil market is very volatile and doesn't like the potential for bad news, or any worries that the war could widen to include oil-producing countries," he said on Friday.
The cost of gas proved to be a large factor in the surprise jump in inflation last month — a trend that is likely to persist in April, experts told CBS MoneyWatch. Paying to keep vehicles running and a roof over one's head accounted for more than half the March rise in the consumer price index, which rose 3.5% last month from a year ago. Gas prices increased 1.7% from February to March, government data released last week showed.
Why are gas prices rising?
Underlying the higher costs of gas are routine factors including refinery maintenance, the switch to summer gasoline and rising demand.
Domestic supply is also impacted as refineries take advantage of milder weather conditions to do necessary maintenance. "Refineries are so dangerous, you have to maintain these places, as there are a million things that can go wrong," said Gross. "They don't like extreme heat or cold, so spring and fall are a sweet spot for refineries and workers. You don't want anyone dealing with petrochemicals in 100 degrees."
Added to the mix are geopolitical factors, such as Israel's war against Hamas in the Gaza Strip, which has spurred the price of oil to six-month highs.
Israel reported only minor damage to a military base after more than 300 missiles and drones were fired from Iran Saturday night, with most intercepted before entering Israeli territory. Worries about Iranian retaliation for an Israeli attack earlier this month on an Iranian consulate in Syria have kept investors and the global commodities market on edge.
"With Iran's attack on Israel over the weekend, the stakes couldn't have been higher for a major potential impact on oil and gasoline prices," Patrick De Haan, head of petroleum analysis at GasBuddy, said in a report. "With the attacks largely thwarted and mostly unsuccessful, and with Iran signaling that their attack will be the end of their response, the risk to crude oil has diminished, and the situation is thankfully likely to de-escalate going forward."
Anytime crude is trading in the mid-80s it starts to put pressure on domestic gas prices, as oil is the main ingredient, according to AAA's Gross, who noted West Texas Intermediate's return Friday to above $87 a barrel. "That's an uncomfortable area for gasoline prices, as it accounts for 60% of what we pay at the pump," he said.
By Monday, WTI futures were down 1.5% at $84.39 a barrel.
Separately, Defense Secretary Lloyd Austin has urged Ukraine against further attacks on Russian oil refineries, citing the risk to global energy markets, the Biden administration official told Congress last week.
Gas prices are averaging close to $5.46 a gallon in California and at or topping four bucks a gallon in six states, including Alaska, Arizona, Hawaii, Nevada, Oregon and Washington, according to AAA. The least expensive gas can be found in Arkansas, Colorado, Louisiana, Mississippi, where a gallon is averaging under $3.20.