Photo by Kevin Lamarque/Reuters.
- AAA expects gas prices to increase by as much as 20 cents this summer.
- Gas prices have already increased by 40% since January.
- Rising gasoline demand and crude oil prices fueled the leap in prices.
- See more stories on Insider's business page.
Gas prices are expected to reach $3.25 by the end of August, according to AAA, which will mark a seven-year high as consumer demand skyrockets and the industry faces supply-chain bottlenecks and production cuts.
The average fuel price in the US is currently $3.14, an eight-cent increase from last month and almost a dollar increase from the average price last year, when quarantining and COVID-related restrictions kept people at home and reduced travel.
"Robust gasoline demand and more expensive crude oil prices are pushing gas prices higher," said Jeanette McGee, an AAA spokesperson, in a statement on the organization's website. "We had hoped that global crude production increases would bring some relief at the pump this month, but weekend OPEC negotiations fell through with no agreement reached."
Rising prices can burden consumers, especially those coping with job losses and less income due to the pandemic. Scott Hanson of Western Springs, Ill. who lost his job as an office manager during the pandemic, told The New York Times that he now pays $60 to fuel his Dodge Charger, which has made trips ferrying his mother to the doctor more expensive.
"It's too much for too many people that lost their jobs or have low-paying jobs," Mr. Hanson said. "Everything bad that could happen is happening all at once."
Gas prices have skyrocketed this year, as consumer demand swelled due to easing travel restrictions, rising employment and higher vaccination rates, while OPEC production cuts have kept supply relatively limited. In April, the US Energy Information Administration predicted a 15% increase in highway travel this summer.
Gas in Washington, a state that has some of the highest gas prices in the nation, is averaging $3.82 per gallon, a nearly 6% increase since last month. Gas averages in California, generally the priciest state for gas, have hit $4.31 per gallon.
Fuel outages slammed gas stations across the country this Fourth of July weekend as an estimated 44 million Americans embarked on holiday weekend road trips. A shortage in oil-tank truck drivers, who gas stations depend on for fuel deliveries, contributed to the issue.
Other factors have made gas an increasingly valuable commodity in recent months, including a ransomware attack in May that forced the shutdown of Colonial Pipeline and a 9% increase in gas prices in April, due to shipping container shortages, congested ports, and production cuts.