Gasoline prices, low through most of 2020, are rising in Arkansas and across the country as global crude oil prices rise, oil refineries recover from winter weather and Americans begin receiving covid-19 vaccinations.
Demand for gas fell early last year when the coronavirus hit. Last April, the national average price for a gallon gas fell below $2 for the first time in four years, according to travel club AAA.
In Arkansas, the price for a gallon of gas has risen 14%, or 30 cents, in the past month to $2.50 on Wednesday, according to AAA. Arkansas saw a 12-cent per gallon price jump from the previous week, one of the nation's top 10 largest recorded weekly increases. Despite the jump, Arkansas continues to report lower per-gallon prices than Oklahoma ($2.53) and Tennessee ($2.52).
The national average price rose 30 cents in the past month to $2.74.
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The recent increases are a direct result of the February winter storm that swept across the South, temporarily shutting down refineries along the Gulf Coast.
"A big share was shut down and required repairs that put a significant crimp on things," said Michael Pakko, chief economist at the Arkansas Economic Development Institute.
According to the U.S. Energy Information Administration, the Gulf Coast accounts for more than half of the nation's refinery capacity, of that, Texas accounts for 32%. The subzero weather took 26 refineries temporarily offline.
AAA is expecting prices to climb another 5 to 10 cents in markets until refinery operations are stable. Spokesman Jeanette Casselano McGee said earlier this week that "barring hurricane season, March may bring the most expensive pump prices of 2021."
Another factor in all of this is crude oil prices. During the pandemic, global oil demand collapsed and pushed prices to record lows in April and May. At one point last year a barrel of crude was negative $36.20 a barrel.
OPEC and the cartel's allies are poised to agree to a production increase this week as the group seeks to cool the rally in crude prices.
There is a widespread view within the group that the market can absorb additional barrels, according to people familiar with the deliberations. While the usual differences are present -- with Saudi Arabia cautious and Russia keen to open the taps -- all sides are ready to increase production, they said, asking not to be named because the information was private.
That could put the group on track to implement the majority of the 1.5 million barrel-a-day output increase that's up for debate today.
An agreement by the alliance -- OPEC plus Russia and nine other member countries -- to increase supply would be the latest sign that the global economy is recovering from the damage wrought by the coronavirus pandemic.
The cartel has endured a year of pain, dominated by the deepest output cuts in its history. But oil prices are poised to climb back to pre-crisis levels above $60 a barrel.
In the second half of 2020, crude oil prices stagnated around $40 before they began to climb in December as travel increased and global production cuts made earlier that year brought supply more in line with demand. They reached pre-pandemic levels for the first time last month and are projected to continue rising.
"Demand could really start rising and put upward pressure on prices," Pakko said.
The national average gasoline price is on track to surpass $3 a gallon, according to AAA. In Arkansas, the highest recorded average price for gasoline was $3.97 on October 17, 2008.
West Texas Intermediate, a benchmark for crude oil, rose $1.59 to settle Wednesday at $61.06 a barrel.
Information for this article was contributed by Javier Blas, Grant Smith and Salma El Wardany of Bloomberg News (WPNS).