It's fall, when oil refineries are turning out cheaper winter-grade gasoline. Oil prices remain at $50 or less a barrel and supplies are ample.
So why is the price at the pump rising in many areas?
According to the AAA Fuel Gauge Survey, the national average price of self-serve regular is around $2.25 a gallon, up about two cents from a week ago and eight cents higher than a month ago. That's a big jump in 30 days, especially at a time when prices are usually headed lower.
While consumers might be wondering what's going on, it might not be a huge mystery after all. The increase in the national average may be largely a product of recent increases in the Southeast and Mid-Atlantic states, which normally have some of the lowest prices at the pump. Also, prices have risen sharply in recent days in parts of the Midwest, which can be volatile depending on refinery bottlenecks.
Lingering effects of pipeline leak?
A few weeks ago a leak in a gasoline pipeline in Alabama stopped the normal flow of fuel to these areas. Prices in South Carolina, among the cheapest in the nation, shot up nearly 20 cents a gallon. Prices also rose in Georgia, North Carolina, Tennessee, and Virginia.
The pipeline has long been repaired, but just as prices were getting back to normal, along came Hurricane Matthew last week. AAA reports Hurricane Matthew caused prices to again rise in some parts of the region, with Florida seeing an increase of six cents a gallon and prices in North Carolina going up four cents a gallon.
The hurricane created supply issues at many gas stations last week for a couple of reasons. Evacuation notices resulted in closed ports and terminals. Because of that, many gas stations simply could not handle the increased demand of drivers gassing up in advance of the storm.
Supplies remain plentiful
The good news? Despite all this turmoil, AAA says gasoline supplies in the Southeast remain plentiful.
Then there is the price of oil, which is now marginally higher than it has been for most of the year. Part of that is a product of speculators, who are betting that OPEC will cap production and begin to draw down the glut of oil that has existed for two years.
But it's far from a sure thing that OPEC will be able to pull that off. It hasn't been the most cohesive group in the past.
And even if it does manage to curtail supply, it has no control over U.S. shale operators, who would likely resume production at higher prices.
Heading into the winter, at least, consumers should see fairly stable gasoline prices below what they paid a year ago.
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