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In the aftermath of the attacks on Saudi oil, the U.S. average retail gasoline price jumped by more than 10 cents per gallon between September 16 and September 23—the largest weekly increase in gas prices since early September 2017, when in the wake of Hurricane Harvey gas prices jumped by 28 cents/gallon in one week, the EIA said on Wednesday.
In its Gasoline and Diesel Fuel Update, EIA surveys retail gasoline and diesel fuel stations each Monday morning. Since U.S. gasoline prices tend to follow the movements of Brent Crude prices, it was reasonable to expect an increase in the U.S. prices at the pump, considering that on Monday, September 16, the first full day of trading after the attacks on Saudi oil infrastructure knocked 5.7 million bpd—or 5 percent of global oil supply—offline, Brent Crude prices jumped by $7.17 a barrel from the previous trading day, EIA said.
EIA analysis has shown that about half of an oil price change passes through to retail gasoline prices within two weeks, while some 80 percent of the oil price change passes through to gasoline within four weeks. The price pass-through tends to be more rapid when oil prices rise rather than when they fall.
On September 16, immediately after the attacks on Saudi oil, AAA spokesperson Jeanette Casselano said:
“Americans can expect local pump prices to start to increase this week. The jump could end up being as much as a quarter per gallon throughout this month.”
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This Monday, September 23, AAA said that “Last week was the first time since early June that the national gas price average jumped more than a nickel in under a few days. On the week, it’s a dime more expensive at $2.66 with half of states seeing prices increase by 10 cents or more.”
Although the one-week increase was significant, the national average U.S. gasoline price is still cheaper by 6 cents compared to last month and cheaper by 19 cents compared to the same time last year, according to AAA.
“The good news is we are seeing downward movement with crude oil prices and stabilization at gas pumps, but Americans can expect some fluctuation through the end of the month,” AAA’s Casselano said, noting that if Saudi production comes back to full capacity shortly, the price spikes are likely to be temporary.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.