Why gas prices are rising across the country again

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• Geoff Bennett:

  Major oil producing countries, including Saudi Arabia and Russia have announced they are cutting oil production by 2 million barrels per day. That means Americans will soon be feeling the effects of that decision when they fill up their gas tanks. But as Ali Rogin reports, the impact will depend at least in part on where in the country you live.

• Ali Rogin:

  Gas prices are likely to change as a result of the decision from OPEC plus, that's the group of 23 oil exporting countries who meet regularly to decide how much crude oil will be produced. But there are several other factors contributing to already high prices in certain parts of the country. Here to break it all down for us is Patrick De Haan, Head of Petroleum Analysis at GasBuddy. It's an app which helps drivers find low fuel prices.

  Patrick, thank you so much for joining us. In general, we've been seeing gas prices tick down throughout a lot of the country. But there are some major exceptions to that, especially with places like California, and the Great Lakes region. And, of course, those are major population centers. So, can we first talk about why prices were ticking back up in that part of the country?

  Patrick De Haan, Head of Petroleum Analysis, GasBuddy: Yeah, that's right. For the past few weeks, an onslaught of refinery issues both in the west coast and the Great Lakes has pushed gas prices up tremendously in areas of California, some stations have risen their price $1 to $1.50, a gallon based on those refinery shutdowns, which has brought supply to its lowest level in the west coast and 10 years to refinery issues in the Great Lakes as well, as said gas prices up 50 cents to $1 a gallon in that region.

• Ali Rogin:

  And when you say refinery issues, what are we talking here? We know that sometimes refineries have to go offline for some scheduled maintenance. But what was happening in these cases?

• Patrick De Haan:

  Well, kind of a variety of both of those, that is refineries generally do maintenance in the off-peak times of year was summer behind us now several refineries are undergoing seasonal maintenance. That's normally not a problem. But in California and the Great Lakes situations, it's the unexpected issues that can arise akin to getting a nail in your tire when you're taking a road trip or a rock in your windshield. These can be minor issues, but put together it greatly limits the ability for refineries to produce gasoline. So, it's planned maintenance, but more so the unexpected outage, just four of them in California alone, that have caused prices to soar.

• Ali Rogin:

  And so, you add to that the OPEC plus news, how is that going to compound what those parts of the country are feeling in terms of gas prices?

• Patrick De Haan:

  Well as a result of the OPEC decision to cut oil production, I expect that the national average could rise 0.10 to 0.30 cents a gallon. What it's going to do, though, in the Great Lakes in the West Coast is something that many probably don't expect. That is the refinery issues I described have started to improve. So, prices in the west coast and the Great Lakes are likely to drop by not as much due to that OPEC decision.

• Ali Rogin:

  And then what about the rest of the country that we left out when we're talking about those specific regions, you just mentioned that prices are likely to increase. So how are those regions of the country going to be affected?

• Patrick De Haan:

  While we're already starting to see some of these regions go up in price, and that's because oil prices had expected this OPEC decision, oil prices now almost $15, a barrel higher than last week. And that's causing prices to rise in areas of the Rockies, the south east coast and northeast, I expect the total increase to be somewhere in the neighborhood of 0.10 to 0.30 cents a gallon. Some areas have already seen that and could go a little bit higher in the week ahead.

• Ali Rogin:

  Yeah. So let me press you on that. I mean, how much do you expect prices to continue to rise, given what you just said that some of these increases have already been baked into what we're seeing at the pump?

• Patrick De Haan:

  Exactly, some of these areas have gone up maybe 0.5 and 0.10 cents a gallon. For those areas, they'll see a little bit more of an increase. But for the areas that haven't seen really anything at all, they're going to bear the brunt of the bigger increases now as much as 0.10 to 0.30 cents starting at any moment, if not already happening. And that could last for the next one to two weeks. But again, I would expect the totality the average impact would be 0.10 to 0.30 cents a gallon coast to coast as a result of OPEC cutting production.

• Ali Rogin:

  So those are some of the desperate activities that we don't necessarily see every year around this time. But what we tend to see is that fuel demand tends to dip a little bit in the fall after the summer travel season, is that seasonal change going to impact gas prices in the short-term at all?

• Patrick De Haan:

  Well, slightly softening the blow of the impact from OPEC's decision to cut oil production. As you mentioned, gasoline demand tends to go down as Americans start staying closer to home. Cooler weather keeps him inside, demand for gasoline goes down. If OPEC had decided this in the midst of the summer driving season, the impact might be double what it otherwise would be. So, a fall in demand generally will help limit the impact. And by the end of the year, we could still see prices that are lower than where we are today.

• Ali Rogin:

  Lastly, in the limited time we have left, Patrick, is there anything that the Biden administration can do to bring down prices in the near term?

• Patrick De Haan:

  Well, I think the Biden administration has talked a lot about how it does not want to rely on the fossil fuel sector and move away from it. But in that attempt, it's also undermining oil companies desires to invest knowing that the writing may be on the wall. So, while the Biden administration has gone to countries like Iran and Venezuela and asked for additional oil output, I think the President could provide some clarity and while he shifts his agenda to cleaner energy, provide clarity to the oil sector that he has gone after in his year and a half in the White House.

• Ali Rogin:

  Fascinating. Patrick De Haan, Head of Petroleum Analysis at GasBuddy, thank you so much for your time.

• Patrick De Haan:

  My pleasure.