Gas Prices News: Oil Continues to Drop, Gas Prices Continue to Rise
Oil prices continue to drop to historic lows, but gas prices nationwide continue to rise, especially in the Midwest, USAToday reports.
The U.S. is seeing an average price of $2.66 per gallon, up from $2.58 last week. That is much lower than the average price of $3.45 last year, AAA's fuel garage reports. But even with oil at its lowest in six years, gas continues to head higher during the current busy driving season.
A major shutdown of the largest refinery in the Midwest, the BP Whiting, Indiana refinery, has caused Midwest gas prices to rise by 40-60 cents per gallon. This outage is expected to last at least another month, said Tom Kloza, chief global analyst for the Oil Price Information Service.
This is the busiest summer driving season since 2007, Kloza said. Bigger cities are also forced to use reformulated summer blends during the summer, and that is what is keeping the prices up.
"These are very high numbers for gasoline, given the price of crude," he said.
Kloza said these temporary factors causing gas prices to rise should end by next month, and gas prices will then start falling by 10-15 cents and then to about an average price of $2 per gallon by the end of the year. Oil prices will soon start aligning with the low prices of crude oil. Crude oil prices have plunged over the summer with an abundant supply and a fear of a global shutdown.
Oil prices are probably hitting their lows for the year, Kloza said. Even with drilling rig cutbacks, U.S. production of oil is at a record high thanks to efficient high outputs.
Iraq and Saudi Arabia oil producers are also increasing their output of oil. Oil traders are also encouraged that output from Iran will increase next year, assuming a nuclear deal is approved by Congress.
According to Gas Buddy, the cheapest gas can be found in South Carolina ($2.154 per gallon) and the most expensive gas is in California ($3.555 per gallon).
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