Massive Jump in Regional Gas Prices Pull Up National Average as Refinery Issues Send Prices Soaring

Gas station signs display the price of gas in Los Angeles, Calif., on Sept. 21, 2022. Allison Dinner/Getty Images

U.S. national average gas prices have risen in the past week, with states such as Washington, Alaska, Oregon, and California seeing prices jump by more than ¢40 a gallon, according to oil analyst Patrick De Haan.

“For the second straight week, average #gasprices have risen, the national average is up ¢8.40 per gallon from a week ago to $3.756/gal, thanks to refinery issues sending prices soaring in several regions, including the West Coast and Great Lakes,” De Haan noted in a tweet on Oct. 2. Inventories in the West Coast are at their “lowest in a decade,” he wrote in another tweet.

As of Oct. 3, the national average price for regular gas was $3.799 per gallon, according to data from the American Automobile Association (AAA). This is up from $3.196 per gallon a year back and $3.725 per gallon a week ago. Prices are down when compared to the peak of $5.016 per gallon hit on June 14.

In five U.S. states, average gas prices were between $4. and $5 per gallon. Prices exceeded $5 per gallon in six states. The highest price was in California, where gas cost $6.382 per gallon. California is also the state which saw the highest spike in gas prices last week, according to De Haan, rising by ¢55.30 a gallon.

Four refineries were shut down in California by late September. Chevron’s refinery in Richmond—the largest gasoline production facility in the state, which outputs 245,000 barrels of gasoline per day—closed on Sept. 11 for repairs.

“Until the state receives significant amounts of imported gasoline and local refineries are fully operational again, we will likely continue to see pump price increases,” Doug Shupe, spokesman for the Automobile Club of Southern California, said in a statement.

OPEC Meeting

Internationally, oil prices jumped by more than $4 in early trading on Monday following rumors that OPEC+ is potentially considering cutting down output by more than one million barrels per day (bpd) to support prices, according to Reuters. OPEC+ nations are due to meet this week.

Since June, oil prices have fallen for four consecutive months due to a strong U.S. dollar, rising interest rates, as well as COVID-19 lockdowns in China, which is the largest energy consumer in the world.

When asked by CNBC as to whether a big output reduction by OPEC+ will send oil prices back to their highs hit in June, Ole Hansen, head of commodity strategy at Saxo Bank, said that the organization’s output reduction won’t be enough to move prices in such a manner.

Even if OPEC+ decides to cut oil production by 1–1.5 million bpd, they will have to change their quota system for such reduction to actually be “a real cut” in the market.

“It is probably also the reason why they are meeting face to face this week in Vienna because it is potentially a highly controversial decision that they may take. But I think the impact is probably going to be less than what the market is looking for,” Hansen said.