Gas Prices Rise Slightly in the New Year

The tumult in far off Central Asia helped push up the price of gasoline sold in the United States. 

Los Angeles gas prices on 11-21-21
The average price for gas in the U.S. is $3.30 per gallon, a small increase over the previous week. California averages $4.65 a gallon.

According to AAA, the national average for a gallon of gas rose two cents to $3.30 last week. GasBuddy has the average at $3.29 with the same increase. The increase was driven by a rise in the price of crude oil, which is closing in on $80 a barrel, AAA noted. The price for a gallon on gas was $2.31 per gallon at this point a year ago. 

“Markets, in general, don’t like uncertainty and volatility, and the oil market is no exception,” said Andrew Gross, AAA spokesperson. “The oil production cuts by Kazakhstan demonstrate that in times of tight supply, it doesn’t take much to put upward pressure on the overall price of oil.” 

Turmoil in Kazakhstan 

The political turmoil in Kazakhstan, which began in the oil fields, led to a reduction in production in the country’s oil fields. Before the violence, OPEC-member Kazakhstan pumped nearly 2 million barrels of crude a day. The cuts unsettled the world’s oil markets. 

Gas Buddy graphic 1-10-22

The Energy Information Administration total domestic gasoline stocks rose by 10.1 million barrels to 232.8 million barrels last week. On the other hand, gasoline demand decreased from 9.72 million barrels per day to 8.17 million barrels per day. 

Typically, pump prices decline due to lower gas demand and a rise in total stocks, but continued growth in the price of crude oil has helped to elevate pump prices. As oil prices continue to climb near $80 a barrel, pump prices are likely to increase. 

The current stock level is approximately 14% lower than at the end of December 2020, contributing to pressure on domestic crude prices. For this week, crude prices could continue to climb if EIA’s next report shows another inventory decline. 

The national average of $3.30 is three cents less than a month ago, $1.01 more than a year ago, according to AAA. 

GasBuddy.com predicts 2022 may bring more sharp increases to gas prices, straining motorists’ wallets even more than the steep hikes of 2021. A national average of $4 per gallon is possible this spring, largely due to pandemic recovery and rising demand before relief, or additional oil supply, arrives later in 2022.  

Rising gas prices boost inflation 

AAA gas chart 1-10-22

Rising gasoline prices have contributed to the increase of inflation across the economy. 

The National Automobile Dealers Association noted in this week’s analysis of the automotive market inflation is a major concern for consumers. In November 2021, inflation hit 6.8% year-over-year as measured by the Consumer Price Index or CPI. The increase marks the steepest 12-month increase since 1982 with indexes for gasoline, shelter, food, used vehicles and new vehicles among the largest contributors. 

Price levels are expected to remain elevated through at least the second quarter of 2022, AAA said. The biggest were in Indiana where prices increased by 17 cents, Ohio increased by 14 cents, Illinois by 10 cents, Michigan by 9 cents, Oregon by 8 cents, Oklahoma and Washington by 5 cents, Kentucky and Tennessee by 4 cents and Alaska by 2 cents. 

The nation’s top 10 most expensive markets are: California at $4.65 per gallon, Hawaii at $4.31, Washington at $3.93, Oregon at $3.89, Nevada at $3.82, Alaska at $3.73, Arizona at $3.60, Idaho at $3.55, Pennsylvania at $3.52 and Connecticut at $3.49.