US gasoline prices are hovering at four-year seasonal highs toward the November midterm elections, even as US President Donald Trump has called repeatedly for the Organization of Petroleum Exporting Countries to buoy prices higher.
Even though gasoline prices usually drop following peak summer demand season, they have not slipped as fast as expected, according to Jeanette Casselano, spokeswoman for the American Automobile Association.
The national price average was at $2.867 per gallon as of Wednesday, and that was its seasonal highest since 2014, according to AAA.
Fuel prices have climbed to a swell in crude oil prices. US crude futures have increased in part because of US sanctions influencing Iran’s petroleum sector, which have already slashed into the nation’s exports, according to market participants.
That has compelled others, including Saudi Arabia and Russia, to make up for the difference. The price of the global benchmark Brent reached a four-year high of $82.55 per barrel this week. Meanwhile, the US crude reached $72.78, which was its highest since July 11.
The sanctions are expected to take supply off the market the moment they go into effect in November. OPEC has ended a meeting on Sunday with no formal recommendation to bolster output.
Increased pressure on global supply could result to gasoline prices staying at current levels or even increase this fall, which would be unusual, according to Patrick DeHaan, who is the head of petroleum analysis at tracking firm GasBuddy. This could have an effect on voter psyche with the midterm congressional elections fast approaching.
“The absence of a decline at the pump in the fall could be notable as voters head to the polls,” DeHaan stated.
Still, prices might not be high enough to sway voter sentiment. Consumers do not typically come up with “lifestyle changes” until prices reach $3.25 per gallon or more, said Casselano.
Wholesale prices have increased in the Midwest as the region’s refineries undergo maintenance processes, DeHaan said.
In the physical market, gasoline cash differentials in Group Three, which is a region that covers several Midwestern states, climbed up to a near three-year high last week, traders said.
US gasoline inventories are at seasonal record highs, which could help temper price increases, stated Bob Yawger, who is the director of energy futures at Mizuho.
The wide discount of US crude to Brent has given incentives to refiners to make gasoline with the cheaper US crude and put into storage for later sale, stated Yawger.