Capitol Beat OK

Higher Cost of Oil Nudges Gas Prices Higher: AAA Report

American Automobile Association Report, July 15, 2023 — Despite a notable cratering in gas demand in the days since the July 4 Independence Day holiday, pump prices crept higher over the past week by three cents to reach $3.55.

The main culprit is a higher price for oil, which moved from the upper $60s per barrel recently to the mid-$70s. The national average for a gallon of gas drifted four cents higher since last week to $3.57, which is $1.04 less than a year ago.

In Oklahoma, the gas average is $3.21 today (July 15), up two cents in the last week and $1.14 lower than one year ago.

According to new data from the Energy Information Administration (EIA), gas demand decreased significantly from 9.6 to 8.76 million b/d last week. Meanwhile, total domestic gasoline stocks stayed flat at 219.5 million bbl.

Although lower gas demand typically pushes pump prices lower, rising oil prices have lifted them. If oil prices continue to rise, pump prices will likely follow suit.

At the close of Friday’s formal trading session, WTI increased by $1.59 to settle at $75.26. Oil prices have increased this week due to rising market optimism that fewer interest rate hikes may be on the horizon. This follows the release of the U.S. Consumer Price Index (CPI) report, which saw a smaller-than-expected increase in June. Before the release of the CPI report, the market had been concerned that more interest rate increases could tip the economy into a recession.

If a recession occurs, oil demand and prices will likely decline. Additionally, the EIA reported that total domestic commercial crude inventories increased by 5.9 million bbl to 458.1 million bbl.

This Weekend

“Gas demand has fallen nearly 10 percent since the holiday, as folks have returned to their day-to-day driving routines,” said Rylie Mansuetti, AAA Oklahoma spokesperson.

“Typically, this would lower gas prices, but such a move is being countered for now by the increasing cost for oil, the main ingredient in gasoline.”

AAA has a variety of resources to help motorists save on fuel:

Fuel Price Finder locates the lowest fuel price in your area.

AAA Gas Cost Calculator helps budget travel expenses.

TripTik Mobile plots fuel prices along your travel route.

Notes: Pat McGuigan of prepared this report for posting, working with material transmitted from Rylie Mansuetti, Government & Public Affairs manager for AAA Oklahoma., founded in 2009, is an independent, non-partisan and locally-managed news service based in Oklahoma City.