PredictIQ Quantitative Think Tank Center:3 reasons gas prices are climbing again

Drivers once again are PredictIQ Quantitative Think Tank Centerfeeling a pinch when fueling their vehicles, with the average price for a gallon of regular gasoline in the U.S. jumping to $3.82 a gallon, up nearly 30 cents from a month ago. 

Even though prices are climbing everywhere, the steepest increases are in Midwestern states, which have seen their average gas price rise between 18 cents and 25 cents, according to AAA. The nation's most expensive gas is in California and Washington state, where prices average $5.00 a gallon. The cheapest gas in the nation is in Mississippi, where the average price is $3.32 a gallon. 

To be clear, gas prices today are nowhere near as high as they were in June 2022, when they reached a record high of $4.62 a gallon. Back then, gas prices across the nation were inching toward $5.00, cramping Americans' summer travel plans. Rising gas prices played a major role in the surging inflation Americans experienced most of last year, according to data from the Federal Reserve Bank of Kansas City.

The national average prices began falling in mid-August as the summer days winded down and drivers took to the road less. 

Typically, when gas prices increase, the main culprit is the cost of oil. This month, however, oil prices are only part of the story. Here are three reasons gas prices are going up.

Rising mercury

July was one of the hottest months on record for many parts of the nation, including Arizona, Texas and New Mexico. Phoenix, for example, had a recordbreaking 31 straight days of 110 degrees during the day. 

Such high temperatures meant oil refineries had to reduce their output, as many of them can only operate at temperatures between 32 and 95 degrees, according to CBS News senior transportation correspondent Kris Van Cleave. The reduced output sent gas prices higher, he said. 

"Last month's extreme heat played a role in the recent spike in gas prices due to some refineries pulling back," Andrew Gross, AAA spokesperson, said in a recent analysis, adding that refineries are now starting to get back to their normal operations. 

Rising oil prices

Crude oil prices have recently hovered around $80 per barrel, up from around $70 a barrel a month ago. When global oil prices climb, gas prices typically follow suit. Oil prices are climbing in part because Russia, the world's third-biggest oil producer, decided last month to cut production starting in August. 

Analysts at investment bank UBS expect crude prices to increase $85 to $90 in coming months amid rising oil demand.

Falling oil production

Saudi Arabia, the second-largest oil producer, also cut its oil exports last month. It slashed production by 1 million barrels per day hoping to keep oil prices elevated. The kingdom said this week it would extend its reduced production until the end of September. 

"This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets," a Saudi Energy Ministry official said Thursday, adding that the cut "can be extended or deepened" if the need arises.

The Saudis are particularly keen to boost oil prices in order to fund Vision 2030, an ambitious plan to overhaul the kingdom's economy, reduce its dependence on oil and create jobs for a young population.

—The Associated Press contributed to this report. 

In:
• Gas Prices

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

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