Gasoline costs could go up for Americans if there’s a severe hurricane season. The average gas price in the US hit $3.88 per gallon, which is the highest in 40 weeks and 31 cents more than a month ago, reports AAA.
Several factors have caused this increase, including reduced concerns about a recession, production cuts by Russia and Saudi Arabia, and high temperatures causing disruptions in refinery operations.
These extreme heatwaves might make things worse by increasing the chances of powerful hurricanes forming.
Experts from Citigroup warn that global warming and warm ocean temperatures could weaken the El Niño wind effects that usually prevent storms from reaching the Gulf of Mexico. This area houses major US refineries and is important for energy exports.
Energy supply disruption
Citigroup analysts mention that if two Category 3 or higher hurricanes hit the US, particularly the Gulf Coast, it could seriously disrupt energy supplies for months.
Although there’s currently a hurricane in the Pacific, named Hilary, predicted to become a Category 4 storm, it’s unlikely to impact energy supplies as it’s on a path towards California, not the Gulf Coast refineries.
While the threat of hurricanes is concerning, there is a silver lining for consumers. Citigroup predicts oil prices to drop in the coming months, which could lead to lower gas prices. They note that there’s a significant oil supply and softer energy demand.
Despite this, the current rise in gas prices could affect inflation progress and pose political challenges for the White House, especially considering the public’s sensitivity to such matters.
Currently, drivers in some states, including Colorado, Arizona, and Illinois, are already paying $4 or more for gas. The White House is aware of the situation and aims to stabilize energy supply and reduce pump prices.
Although gas prices are relatively lower than their peak last year, the recent increases have put a stop to the trend of significant savings at the pump compared to last summer. Heatwaves have also played a role in influencing these price changes, highlighting the importance of transitioning to a cleaner energy economy.