Why Gasoline Prices Are Rising Faster Than Usual This Year

Fuel costs are once again driving inflation. Don’t panic.

By David Uberti of The WSJ. Excerpts:

"Prices at the pump typically rise in the first half of the year as more Americans get back on the road and refiners transition to less-polluting summer blends. But costs in 2024 have ramped up faster than normal, thanks largely to severe weather at home and geopolitical disruptions abroad.

Unleaded gasoline ran $3.54 a gallon on average across the U.S. on Wednesday, according to AAA, up 3% from a year ago and about 14% higher than at the start of 2024."

"Bets by energy investors on Wall Street suggest that the price gains have room to run. The cost of gasoline shipments into New York Harbor next month has jumped 31% since the beginning of the year. That is faster than the average increase of 20% during the same period over the past quarter-century, according to FactSet."

"Record American crude output in 2023 surprised forecasters, and kept prices in check. This year, production cuts by members of the Saudi and Russia-led OPEC+ cartel have helped push up the price of benchmark U.S. crude by 16%, to $83.17 a barrel. 

At the same time, fuel makers in the Midwest and along the Gulf Coast have taken a beating from winter storms and other disruptions. U.S. refinery utilization dropped to less than 81% for two weeks in February, according to the Energy Information Administration, the lowest nationwide run rate since the depths of the pandemic. 

In Russia, meanwhile, an expanding Ukrainian drone campaign has hammered key refineries. The damage has required monthslong repairs and pushed the Kremlin to conserve domestic supplies by curbing fuel exports, which often end up in China, India or Turkey."

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