Prices at the Gas Pump Headed Higher

The rise in crude oil prices continues to push gasoline prices up.

The rebound in crude oil prices continues to impact gasoline prices for consumers at the pump.

People should expect gasoline prices to start to rise moderately by 20 to 30 cents a gallon if they are currently paying $2.50 a gallon or less, said Patrick De Haan, head of petroleum analysis at GasBuddy, a Boston-based provider of retail fuel pricing information and data.

Prices will rise by 10 to 25 cents a gallon for drivers living in areas where gasoline costs $2.50 to $2.75 a gallon, while stations selling gasoline for $3 a gallon could soon increase prices by 5 to 10 cents per gallon, he said.

The recent increase in crude oil prices has resulted in gasoline prices inching higher. Crude oil prices rose by at least $2 a barrel on Dec. 23 when Russia moved to lower its output of crude oil due to the price cap instituted by the G7 countries on Moscow's exports.

Crude oil prices fell on Dec. 28 by 1.7% or $1.39 to $82.94 a barrel for Brent crude oil, the international benchmark, due to concerns that increasing covid cases will shrink demand in China, the No. 1 oil importing country.

The decline was the first after three consecutive trading days where crude oil contracts moved higher.

The expectation that demand for fuel would increase exponentially as the Chinese government lifted tight pandemic restrictions could be premature.

The cold weather also impacted refinery production over the weekend.

West Texas Intermediate (WTI), the U.S. benchmark for oil prices, also declined by 1.4% or $1.12 to $78.41 per barrel.

Gasoline Prices Still Under $3 a Gallon

Gasoline prices will remain under $3 a gallon in many parts of the U.S. currently, De Haan said.

"Stations that are closer to $3 a gallon shouldn't have to go up yet, But those sub-$2.50 and sub-$2.75 prices will be the first to disappear--for now," De Haan tweeted.

Since gasoline prices vary by region due to taxes, refinery capabilities and access to pipelines, the gains will occur in an "odd fashion," he said.

"We're going to see #gasprices inching up in odd fashion, especially in areas of the Great Lakes, South and Plains, due to oil prices rallying and extreme cold shutting some refineries. But it'll likely be the lowest #gasprices that rise, potentially 10 to 20 cents a gallon in the days ahead," De Haan tweeted.

Despite the slight gains in gasoline prices, the average price nationwide has fallen for  seven consecutive weeks by 49 cents from a week ago to $3.05 per gallon as of Dec. 27, according to GasBuddy data compiled from over 150,000 gas stations across the country.

The national average fell by 50 cents compared to last month and was 20 cents per gallon lower than a year ago. 

Diesel prices have mirrored the trend and the national average price of diesel dipped by 86 cents during the past week, now selling at $4.68 per gallon.

The declines in gasoline prices could be short-lived.

“While the national average declined for the seventh straight week, with oil prices rallying, it remains to be seen if we will manage another week of gasoline price declines," he said. "We’re still waiting for the national average to fall below $3 per gallon, something that is suddenly a bit less likely given the extreme cold weather, interrupting refining operations in the south, curbing gasoline production and potentially driving prices up slightly.”

Drivers can expect that gasoline prices in 2023 will still remain 50 cents a gallon cheaper than 2022, while $4 a gallon gasoline "remains possible," DeHaan said.

Baker Hughes  (BKR) - Get Free Report, an oil well drilling company, reported that the U.S. rig count was up by three to 779 last week and was 193 rigs higher than a year ago. The Canadian rig count was unchanged at 199 and was 32 rigs higher than a year ago.