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U.S. gasoline prices have surged to their highest level this year, continuing their relentless climb. National average gas prices in the United States have inched up to $3.873 per gallon from $3.564 a month ago, while a gallon of diesel now averages $4.338 from $3.851 a month ago. In California and Washington, prices have surged above $5 a gallon.
Strong demand and a series of refinery outages are largely to blame for the recent rise, while tightening markets have also been pushing crude prices up. Delta's 185,000-barrel-per-day refinery in Trainer as well as Irving Oil's 320,000-barrel-per-day oil refinery in New Brunswick, Canada will be down for much of September and part of October, affecting about 9% of the product supplied in their regions.
"It is fairly abnormal to see prices going up" at this time of the year. We tend to see prices declining going into the fall," Patrick De Haan, head of petroleum analysis at price tracker GasBuddy.com, has told Reuters.
Unfortunately for the U.S. motorist, Goldman Sachs has predicted that retail gasoline prices will average as high as $3.90 a gallon this month and could remain high as supplies remain tight.
Weekly U.S. gasoline stockpiles remain below the five-year average of inventories throughout this year, putting more pressure on gas prices. Total U.S. gasoline stocks in the current month fell to 216.4 million barrels, the fifth decline in six weeks.
But high gas prices are just part of the energy challenges facing the U.S. consumer. A summer of record-breaking heat has dramatically increased electricity consumption for Americans with many now struggling to keep up with their skyrocketing electric bills. According to the U.S. Energy Information Administration(EIA), the average household spends about $262 a year on air conditioning, with costs going as high as $525 in the hot and humid Southeast.
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.