An Arctic explosion from Texas to Maine raises rising gas and domestic prices – and experts say they are likely to continue to rise over the next few months.
A deadly winter storm strengthened the heartland and left millions without power as record low temperatures caused an increase in demand that electric grids could not keep up with. In Minnesota, thermometers dropped to minus 38, the National Weather Service said.
The national average gas price for normal lead-free Tuesday rose to $ 2.53 per liter, nearly 15 cents higher than last month’s average, according to gas price website GasBuddy.
Natural gas and propane prices have skyrocketed for utilities by as much as 200 percent as inventories have sharpened, a rise that could eventually work to customers in the form of higher prices for domestic heating.
Abnormal freezing temperatures have forced the closure of a number of major refineries in Texas, the largest land-producing state in the US, to reduce supply – just as demand taken down by the coronavirus pandemic has begun to recover for management and fly to explosion of vaccines.
The production and supply disruptions are ‘like a hurricane’, oil analyst Andy Lipow told NBC News by telephone.
“The cold weather has led to a loss of crude oil production of about 1 million barrels, and also loses about 50 percent of natural gas production due to freezing temps,” Lipow said.
However, managers had to get better accustomed to calculating a new gas budget, because even after the weather warms up and production resumes, higher prices are likely to stay here, Lipow said.
“Think of it as a new price threshold,” Lipow said. “Once people are vaccinated, they go to the roads and planes.”
President Joe Biden’s $ 1.9 billion stimulus package, if successful, is also expected to create new demand, Lipow said.
Prices could start to rise even more before the weekend, experts said.
“The boom could start later this week and last 7 to 12 days before it is paid to what motorists pay,” Patrick De Haan, head of gas analysis at GasBuddy, said in an email. “The extreme cold could increase prices by 7 to 15 cents per liter.”
National average gas prices rose steadily from their closing lows of $ 1.74 per liter in April, which ranged between $ 2.10 and $ 2.20 between summer and winter. Since December, they have been rising steadily after the cut of the oil-producing group OPEC + in anticipation of weaker spring demand.
‘The biggest factor driving gas prices is crude oil prices. They have been increasing for weeks and despite the low demand, pump prices are rising, “said Jeanette Casselano McGee, a spokesperson for AAA, the motor services group.
“The market is very optimistic about vaccinations and what it could mean for return travel, which means it’s higher crude oil,” which accounts for more than 50 percent of the pump price, McGee said.
Crude oil benchmark prices for WTI closed just over $ 60 on Monday, the highest since January 2020.
According to the latest report from the Energy Information Administration, the total domestic crude stock fell by 6.6 million barrels of oil to 469 million, while the use of refineries increased slightly.
More than 40 states are already seeing gas prices higher than last year, and half are seeing double-digit increases.
“Rough, not the demand, was the main factor that increased the price of gas prices this year,” McGee said.
Stocks will have to improve in the spring after OPEC + producers indicated they were likely to increase supply after the price recovery, Lipow said – although producers are still keeping a close eye on the pandemic.
