NEW YORK POST
August 9, 2023

Gas prices hit 8-month high as oil prices soar — and there’s no relief in sight

Prices at the pump in the US hit an eight-month high this week — boosted by the increased cost of crude oil as producers slash output.

According to roadside assistance company AAA, as of Friday, the average national gas price is $3.73 per gallon for regular gas — up 20 cents from last month’s average.

The more fuel-efficient premium gas, meanwhile, has surged to nearly $4.50 — also a 20-cent increase from June.

California’s average is the highest, at $4.95 per gallon of regular gas. In counties like Mono, for example, located just outside Yosemite National Park, the price per gallon has soared to an eye-watering $6.05, according to figures by AAA.

AAA spokesman Robert Sinclair cited OPEC+’s July 1 decision to slash crude oil production to 3.6 million barrels per day — “3.6% of total daily global production of 100 million barrels,” Sinclair said.

The voluntary cut is being implemented on top of a broader deal by the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia to limit supply into 2024 as the OPEC+ producer group seeks to boost flagging oil prices.

OPEC+, which groups OPEC and allies led by Russia, pumps around 40% of the world’s crude — which is used to make petroleum — meaning its policy decisions can have a major impact on oil prices.

“It could be said the production cut chickens have come home to roost,” Sinclair told The Post.

Prices at the pump in the US hit an eight-month high this week, to $3.73 per gallon of regular gas.
California’s average is the highest, at $4.95 per gallon of regular gas.   EPA
Saudi Arabia also pledged to cut production by a further 1 million barrels per day as of July — the kingdom’s harshest reduction in years.

“Nearly 4% of daily output being cut has led to increased crude and gasoline prices, despite less-than-robust summer demand in the US,” Sinclair said.

Over the past month, US West Texas Intermediate crude has climbed nearly 13%, to $79.56.

Brent crude futures were up this past month about 11%, at $82.33 a barrel.

Refinery utilization, which measures how much crude oil refineries are processing, is also down, which Sinclair ascribed “to excessive heat” that has been affecting two-thirds of the US across two dozen states this month.

Sinclair, who oversees America’s Northeast region at AAA, noted that a “local refinery n New Jersey was offline for a while.”

He was referring to the Bayway Refinery, a 150,000-barrel-per-day oil refinery owned by Phillips 66. It’s the largest gasoline-making unit in the Western Hemisphere, and was offline for most of June and July for unplanned repairs, according to Reuters.

“It was supposed to be restarted in the last week or so,” Sinclair said, suggesting it’s still closed.

The Post reached out to Bayway Refinery to inquire, and its community hotline confirmed that as of July 16, it was still offline for repairs.

As for the future, Sinclair said it’s possible Americans could be in for another 25-cent increase.

“The major X factor is a hurricane hitting the oil infrastructure of the Gulf Coast. That could send prices soaring overnight,” he said. “And with water temperatures around Florida at 100 degrees, the possibility of the formation of a major storm is increased.”

High gas prices — along with Russia’s invasion of Ukraine — have prompted the US to start moving away from fossil fuels.

A long-term projection published by the International Energy Agency in November said oil demands could level off in the 2030s.

As the world becomes less dependent on hydrocarbons, oil demand in 2024 will fall to half the rate seen in the past two years.

Barrel needs are projected to nosedive from 2.5 million a day in 2023 to 860,000 next year — and then to a tepid 400,000 in 2028, the IEA told Bloomberg last month.

The same year, the agency sees the need for combustible fossil fuels hitting an absolute peak of 81.6 million barrels a day, the outlet reported.