Gas prices rose to their highest level since August, a seven-year high, as Hurricanes Ida and Nicholas slowed oil production and refinery recovery.
The U.S. Energy Information Administration (EIA) reported nationwide average gasoline prices at $3.18 this week, up 1.9 cents from a week ago and $1.02 from the same time in 2020.
Diesel prices averaged $3.39 nationwide, EIA reported, up 1.3 cents from a week ago and up 98.1 cents from the same time a year ago.
“Hurricane Nicholas complicated and slowed the recovery from Ida, but the seasonal drop-off in demand helped mitigate price increases on the week,” said Andrew Gross, AAA spokesperson. “We are not in the clear yet, though. We are only at the mid-point for hurricane season, and it has been an active one so far, with 17 named storms already. Motorists can expect price fluctuations into October.”
EIA reported gasoline demand has fallen 8% to 8.9 million barrels a day, the lowest level since Memorial Day.
Nearly a quarter of offshore Gulf of Mexico oil production remains offline, AAA reported. However, most storm-affected refineries are reporting some level of restarting. Once fully back online, refinery production will help to increase domestic supply levels, which are at the lowest stock level since the post-Hurricane Harvey period in 2017.
The tightened supply level has contributed to an increase in oil prices, which hit a high of $72 a barrel last week, a level not seen since July. If the price of oil remains at this level or goes higher, AAA stated, it likely will result in higher prices at the pump.
