Why Gasoline Prices Are Rising Faster Than Usual This Year

Nic Malick felt so “road-trip rich” early this month that he and his wife drove their children 150 miles to Springfield, Mo., visiting friends and trying the brisket at Buc-ee’s, a convenience store chain with a cultlike following. Another getaway isn’t looking likely.

“With gas prices the way they are, it doesn’t make sense,” said Malick, who lives outside of Kansas City, Mo., and is now spending as much as $20 more on gas a week.

Prices at the pump typically rise in the first half of the year as more Americans get back on the road and refiners transition to less-polluting summer blends. But costs in 2024 have ramped up faster than normal, thanks largely to severe weather at home and geopolitical disruptions abroad.

Unleaded gasoline ran $3.54 a gallon on average across the U.S. on Wednesday, according to AAA, up 3% from a year ago and about 14% higher than at the start of 2024.

Among the regions that have seen the fastest increases: the Salt Lake City area, where gas stations raised prices by about 65 cents to $3.77 a gallon over the past month. In metropolitan St. Louis, drivers have seen a roughly 51-cent price hike to $3.45 during that period. In Chicagoland, costs are up by roughly 48 cents to $4.08.

The uptick has helped make inflation stickier than expected in the first quarter and weighed on Americans’ outlook on a largely robust U.S. economy. Gasoline and shelter contributed more than 60% of the consumer-price index’s increase in February from a year ago, according to the Labor Department, marking the first month since September that spending at the pump edged higher.

The Federal Reserve’s preferred inflation gauge doesn’t include volatile food and energy costs. Still, rising prices displayed on corner gas stations and highway billboards are constant reminders of economic pressures.

“When the price of gas goes up, everybody feels it,” said Malick, a 36-year-old Missouri native who works in customer-service technology for the auto industry.

Bets by energy investors on Wall Street suggest that the price gains have room to run. The cost of gasoline shipments into New York Harbor next month has jumped 28% since the beginning of the year. That is faster than the average increase of 20% during the same period over the past quarter-century, according to FactSet.

“Even after the recent run up, we still see upside risk” for gas prices, Bank of America told clients in a note recently.

Record American crude output in 2023 surprised forecasters, and kept prices in check. This year, production cuts by members of the Saudi and Russia-led OPEC+ cartel have helped push up the price of benchmark U.S. crude by 14%, to $81.35 a barrel.

At the same time, fuel makers in the Midwest and along the Gulf Coast have taken a beating from winter storms and other disruptions. U.S. refinery utilization dropped to less than 81% for two weeks in February, according to the Energy Information Administration, the lowest nationwide run rate since the depths of the pandemic.

In Russia, meanwhile, an expanding Ukrainian drone campaign has hammered key refineries. The damage has required monthslong repairs and pushed the Kremlin to conserve domestic supplies by curbing fuel exports, which often end up in China, India or Turkey.

Those stoppages have helped boost profits—and share prices—of refiners that can manage to stay online and feed shipments to a hungry global market. Shares of fuel-making giants Marathon Petroleum, Valero and Phillips 66 have leapt ahead of major indexes’ advances this year, recently trading at record highs.

The good news for drivers: Some of the factors driving the price bumps are expected to subside in the coming months.

With so much money to be made, more American refineries have powered back up in recent weeks, promising to help refill storage tanks around the country. On Wall Street, traders are betting those incoming supplies will help push wholesale gasoline prices lower starting in May.

“There’s plenty of motive for refineries to run hot and run hard,” said Tom Kloza, a fuel analyst at OPIS. “The question is: Will they be able to do that?”

In the summer, heat waves that scorched much of the U.S. strained fuelmakers’ cooling processes and forced some companies to dial down operations. Any disruptions this year would likely hit drivers’ pocketbooks hardest in parts of the U.S. that lack refining capacity, including many Western states.

“That is a region that can’t tolerate any issues,” Kloza said.

Write to David Uberti at [email protected]