Over the last few months gasoline prices have been on a steady rise.
After holding in the $1.50 range, they’ve started a slow progression toward $2.00 a gallon.
Now, as fall is upon the region, prices are still rising, with a few stations already at $1.99.
Why are prices going up, at some stations, a penny or two a day?
WWL sought answers.
And we went to one of the best sources in the business, American Automobile Club’s Don Redman.
Redman says there are a lot of factors to the uptick we’re seeing in the price of fuel.
“We saw the gasoline inventories fall from where we were at this time last year,” Redman says. “So you’re starting to see the demand in gasoline picking up. Just as we’re starting to see a decrease in the inventory, and that’s what is driving those prices upwards.”
Usually about this time, prices are leveling off or even dropping rapidly as refiners are looking to get rid of summer blend gas and switch over to winter blend, according to Redman.
But this year is different (of course). Yes people are starting to drive more as restrictions on going out are relaxed and people are venturing out from their self-imposed sequester due to COVID-19.
But the active hurricane season along the Gulf Coast is also a reason for gas prices to be inching up.
“So you see an increase in demand—not large, but as you see more people moving around—it’s really kind of surprised the market. And you just have low output by the refineries,” He explains. “We’re looking at refineries on the Gulf Coast producing at about 77%. Soon to be zero until Hurricane Delta gets through!”
Redman also says market forces are responsible for the rise in prices: “A lot of it is tied to the price of crude oil which is up about $4.00 since Monday. We’re looking at about $41.00 a barrel compared to we started the week at about $37.00 a barrel.”
Just this week, most refiners are switching to the winter blend of gasoline, which is easier to produce, has a higher ignition rate, and is cheaper to refine.
But will the price of gas level off?
“When we get past the hurricane season, we’ll see those prices stabilize,” Redman explains. “We’re looking at a statewide average of $1.98 a gallon. That’s compared to $2.28 last year.”
In the New Orleans metro area, the current average for a gallon of regular is now $1.88. That is up four cents in the past week.