ECONOMY
While gas prices are well below levels seen last summer, Austin-area motorists may have noticed some daily variety and a steady climb through the summer so far. SUMMER STEPUP
SOURCE: AAA TEXASCOMMUNITY IMPACT
Weekly Austin-area gas prices
$5.00
$4.50
Prices have held relatively steady through the summer, but began climbing in late July.
$4.00
$3.50
$3.00
Gas prices hit their highest levels in the past decade in June 2022.
$2.50
$0
Global, seasonal trends spur summer gas price swings for Texans Central Texas consumers are contending with a hot summer at the gas pump with prices gradually rising—although costs have yet to reach the highs of last year’s spike. BY BEN THOMPSON events are contributing to recent price uctuations. Some of those trends include: • Russia’s invasion of Ukraine last year
motorist activity. • Armbruster said the 2023 summer travel season may be a big one as AAA tracked more Texans getting out and about following the end of most pandemic-era precautions. That activity is also coming with the slightly higher seasonal cost attached to summer blend gasoline. • De Haan said summer heat has caused some issues for Southern re¡neries, which may also contribute to some increases at the gas pump. Looking ahead Before any price drop that typically comes in fall or winter, De Haan said he’s not optimistic that drivers are in line for immediate relief at the pump thanks to those global oil production trends and a potentially active hurricane season. “The next few weeks as we close summer I think there may be some upward pressure, and then I’m hopeful that sometime this fall we might start to see some downward pressure because of the seasonal changes,” he said. For now, De Haan said variances that motorists might notice at their local pumps are likely due to pricing strategies or competition in the area rather than market-level happenings. Armbruster said he doesn’t expect any major pricing changes as the summer travel season slows down—while noting that unexpected national or global events can always leave an impact. “After Labor Day we see demand fall and we have to switch over to winter blend gasoline, which is a little cheaper to produce. … You would expect that the prices will come down after Labor Day, if not earlier,” he said. “But of course with gas prices, as we’ve seen in the last year or so, things can change at a moment’s notice.”
• Oil production cuts by Organization of the Petro- leum Exporting Countries members and allies The context Ed Hirs, a University of Houston Energy Fellow and energy economist, said OPEC production cutbacks—thousands of barrels daily, led by Russia and Saudi Arabia—appear to be having the most noticeable impact on crude oil prices, and costs at the pump right now. “We’ve seen OPEC+ and the Saudis in particular do their best to withdraw production, and by withdrawing production we mean withdrawing the sale of oil to the global market,” he said. “Apparently at this point, they’ve actually made some cuts of substance.” University of Texas ¡nance professor Ehud Ronn said the steadily climbing price of oil through July, an almost 20% increase in the past month, is also a key contributor. The American Petroleum Institute said crude oil accounts for roughly half the cost of consumer gasoline. “There are many factors that go into retail prices, but an important one is the wholesale price,” he said. “That has of course been impacting retail prices.” Asking the experts Looking ahead, experts point to several compli- cating factors for gas prices. • Patrick De Haan, head of petroleum analysis at GasBuddy, said he believes lessened global fuel supply will hike prices in the near term. • He said changing economic conditions are also a reason behind recent shifts in pricing and
Over the past year, the Austin area and the US as a whole experienced one of the biggest gas price swings of the past decade, according to data from GasBuddy, a company that tracks gas prices. So far this summer, prices have seen less varia- tion—but motorists may be seeing more day-to-day adjustments thanks to a heat wave, seasonal travel activity and some higher-level market disruptions. Zooming in After dipping to extreme lows at the onset of the COVID-19 pandemic, gas prices steadily rose through 2020 and 2021 before peaking in late spring 2022, hitting a high of around $5 per gallon nation- ally by mid-June 2022. The Austin area reached about $4.60, according to GasBuddy data. Since then, gas prices declined, according to the data. This spring and summer, local prices hovered above $3 but are now climbing toward $3.50 per gallon. What they’re saying “We started o the summer a little bit cheaper than where we are now,” said Daniel Armbruster, a public aairs specialist with AAA Texas. “In the last month, it’s bounced back and forth a little bit which is kind of what’s happened everywhere.” Zooming out Analysts said seasonal trends—gas prices tra- ditionally rise in the summer, in part thanks to travel—combined with recent national and global
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GEORGETOWN EDITION • AUGUST 2023
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