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Gas prices reached a four-month high as the warmer weather gets drivers back on the road.
Part of the problem is that demand is flooding back at a time when refineries are having unprecedented challenges, according to energy analyst and FOX Business contributor Phil Flynn.
Drivers are also in the midst of switching over from the wintertime gasoline blends to the summertime blends, which are more expensive to blend and add 10 to 15 cents a gallon to prices, Flynn told FOX Business. This year it could go even higher.
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In February, energy prices jumped for the first time in months, only adding further pressure on households. Prices rose 2.3% during the month, including a 3.8% jump in gasoline.
As of Tuesday, the national average price for regular gasoline is sitting at $3.39 per gallon, according to the latest data from AAA. A month ago, prices were sitting at $3.19. However, prices are still below the level they sat at a year ago, which was about $3.47, according to AAA.
AAA spokesperson Andrew Gross said this is the seasonal upswing, and that prices in summer usually peak around June and July before falling.
However, Flynn warned people are still feeling the reverberations from various refinery outages, namely the extended shut-down of the Whiting BP refinery in Indiana and the U.S. Gulf Coast refinery in Texas, hindering supply. Flynn also noted the flaring incident at the Wood River refinery in Roxana, Illinois, further tightened supply.
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Typically, “even in the worst case scenario, we may see a refinery knocked out of action for two weeks, maybe three weeks, and then it gets back on line and product begins to flow,” Gross said. However, the Whiting BP refinery in Indiana shut down at the beginning of February.
Summertime gas prices typically peak around June and July before falling. (Sven Hoppe/picture alliance via Getty Images / Getty Images)
“The fact that the supplies of gasoline crude oil and diesel fuel are below average here and around the world against a backdrop where OPEC is cutting production is setting the stage for yet another rally as the market heads into the summer driving season,” Flynn said.
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Moving forward, if things do not go smoothly for the U.S. refining industry, then “we could see a continuation of the uptick in gasoline prices that we have seen,” Flynn said. He further noted that if crude oil breaks out above $80 a barrel, which he thinks is likely, “it will put further upward pressure on the price of gasoline as we get into the heart of the summer driving season.”
FOX Business’ Megan Henney contributed to this report.
