U.S. retail gas prices are on the rise

The average price for a gallon of regular unleaded gasoline continued its increase this week with the price at the pump up more than 10 cents since last week, data published Friday show.

Motor club AAA lists a national average retail price of $3.28 for a gallon of regular unleaded, up from the $3.17 average reported one week ago. Retail gasoline prices last year topped $5 per gallon as the global commodity sector adjusted to Western-backed sanctions targeting Russia, one of the world leaders in oil and natural production.

But fears about a global recession, lackluster demand from COVID-stricken China and support from the release of oil from the nation’s Strategic Petroleum Reserve helped cool the broader commodities market enough that $3 per gallon was in the cards for late 2022.

Federal data released this week show why the price at the pump is on the rise during the first full week of the new year. Gasoline inventories and production both decreased and refineries were working at about 80% of their peak capacity, down about 12% from the prior week.

The late December cold snap may in part be to blame for the decline in refinery utilization. AAA added that it may be a simple matter of market fundamentals that are leading to higher prices at the pump.

“Tighter supply and higher gasoline demand are pushing pump prices higher,” the group said. “As demand remains robust and stocks remain tight, drivers could continue to see pump prices increase as the new year begins.”

California, with elevated state taxes on gasoline, has the highest state average in the Lower 48 at $4.44 per gallon. Georgia, meanwhile, has the lowest price in the nation at $2.83 per gallon.

Federal estimates put the average price for 2023 at $3.51 per gallon, down from the near-$4 per gallon average last year. The price at the pump could continue to climb from here as refiners start preparing to make the summer-grade of gasoline, which is more expensive because of the additional processes meant to keep it from evaporating during warmer months.

That said, few analysts expect to see prices spike as high as they did in 2022.