Gas prices are expected to rise this summer by about $0.10 per gallon amid falling refinery capacity and higher refining costs, according to government data.
"US retail gasoline prices will average about $3.70 per gallon for the summer driving season, which runs from May to September when the United States will have 3%, or 620,000 barrels per day less refinery capacity compared with the 2019 peak," said a recent Energy Information Administration report.
Andy Lipow of Lipow Oil Associates said over the last several years, the refining industry has shut down about 7% of its capacity.
"Refineries are getting older, they may have to [spend] significant amounts of money replacing large pieces of equipment nearing the end of its useful life," noted Lipow.
Gas prices rose in April amid refinery interruptions, putting upward pressure on consumer prices last month even as overall inflation eased. However, prices at the pump have stabilized from their peak and ticked slightly lower in recent days.
On Thursday the national average for gasoline stood at $3.60 per gallon, down $0.04 from one month ago, according to AAA data. The average price of gas is up roughly $0.40 a gallon since the start of the year.
US crude futures have come down roughly 8% from their peak in April amid a ramp-up of diplomatic efforts for a ceasefire between Israel and Hamas.
"While the Middle East unrest and Russian/Ukraine issues will linger, with no real supply issues being noted the trade will focus more on seasonal demand and production numbers," said Dennis Kissler, senior vice president at BOK Financial, in a note last month.
On Wednesday, West Texas Intermediate (CL=F) gained more than 1% to settle above $78 per barrel, while Brent (BZ=F) crude, the international benchmark price, settled just below $83 per barrel.
Analysts anticipate OPEC+ will extend its production cuts past June. The oil alliance is expected to meet at the beginning of next month.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.