When will gas prices stop rising? Experts weigh in

Drivers have been relieved to pump gas this summer compared to the dizzying prices a year ago, but an alarming trend has emerged in recent weeks: Prices are rising again.

Over the past month, the average price of a gallon of gasoline has increased by more than 8%, surpassing $3.80. AAA data shows. In California, the state with the highest gas prices, an average gallon costs more than $5.

Analysts told ABC News that production cuts imposed by OPEC+ limited supply during the summer tourist season when demand peaked, sending crude prices skyrocketing and in turn causing a machine shock. pump. Meanwhile, a heatwave across the United States has limited domestic refining capacity.

Gasoline prices typically fall as tourism slows in the fall months, but analysts differ on the likelihood of such an outcome amid questions over OPEC+ policy and The continued oil demand of a recovering global economy.

Here’s what to know about why gas prices are up and when they’ll fall again, according to experts.

What caused the gas price increase?

Analysts said the recent spike in gasoline prices was mainly due to soaring crude oil prices, which make up the main input cost for gasoline used to make cars in the US.

Rising oil prices marked the expected outcome of the policy enacted by OPEC+ to limit output and tighten supply. The move has sent Brent crude prices up more than 11% over the past three months.

Peter McNally, global leader for industrial materials and energy at Third Bridge, told ABC News: “The most important factor is what’s going on with crude. “The market has looked ahead and seen a tighter crude oil environment.”

Meanwhile, US crude oil production is set to hit a record high output this year. US Energy Information Administration said on Tuesday. But oil prices are set in the global market, where OPEC+ cuts cannot be offset by comparable short-term increases in US oil production.

Some analysts also point to the recent heatwave that has limited the ability of US refineries to operate at full capacity as they turn crude into gasoline.

Exacerbating supply shortages, a spike in demand amid summer travel also contributed to price increases, analysts said.

“Globally, August is the peak,” said Richard Joswick, head of global oil at S.&P Global Commodity Insights, told ABC News.

Joswick added that, while despite bleak forecasts for more than a year, the resilient global economy has helped business perform well and demand for oil has surged.

“All the predictions of a recession did not come true,” Joswick said.

When will gas prices start to fall?

Gasoline prices typically fall in the fall when travel stabilizes and demand declines, analysts said, but they disagreed on whether that price cut will pass this year.

McNally said price movements will depend largely on two hard-to-predict factors: the performance of the global economy and OPEC+’s approach to policy.

He added that a bullish reversal could happen if economic activity slows and OPEC+ relaxes supply constraints. Otherwise, the high price may persist.

Expressing pessimism about future prices, Ramanan Krishnamoorti, a professor of petroleum engineering at the University of Houston, told ABC News he expects sustained economic growth and cuts in oil production.

“Everything is pointing to upward pressure on crude oil prices globally,” Krishnamoorti said, adding that he expects prices to continue to rise over the next six to 12 months.

Andrew Gross, a spokesman for AAA, told ABC News that in a sign of hope, the average price of a gallon of gas has remained steady over the past eight days.

“Often with big swings either up or down, there is a period of stabilization in prices before the national average starts moving in the opposite direction,” Gross said. “In this case, that would probably be lower.”

Joswick, of WORLD&P Global Commodity Insights said he expects prices to stay at current levels for the next four weeks but begin to decline in the second half of September or October. He cited a slowdown in demand and a gradual easing of supply shortages. bow.

However, the eventual drop in prices requires the absence of disruptive events, such as a major hurricane causing damage to infrastructure, he added.

“Wild cards are a hurricane threat,” says Joswick. “If a hurricane comes and makes landfall on the US Gulf Coast, prices will skyrocket.”