Update, Aug. 25, 4:40 p.m.: This story has been updated with comments from a senior business economist with the Federal Reserve Bank of Dallas.
Gasoline prices climbed by more than 50 cents per gallon in El Paso since last month, hitting an average of $3.95 per gallon of regular unleaded on Wednesday – topping the statewide and national average prices for gas.
El Paso and Las Cruces saw gasoline prices increase more in the last month than almost any other U.S. city, according to gas price-tracking site GasBuddy. In Las Cruces, a gallon of regular gas cost on average $3.72 per gallon on Wednesday, an increase of 58 cents from this time last month – the second-largest jump in the nation over that time.
Also on Wednesday, the statewide average price of gas in Texas was $3.46, an increase of 20 cents per gallon from a month ago, according to AAA Texas.
Meanwhile, the national average price for a gallon of gasoline increased 25 cents over the last month to hit $3.85 on Wednesday. Despite the recent increase, that price was 5 cents lower per gallon than the national average price a year ago. El Paso usually has cheaper gas than the national average price, but the recent surge in prices here reversed that for now.
Outside of the historic jump in gasoline prices here last summer – when El Paso gas prices hit a record $4.89 on average last June – average gas prices have never reached as high in El Paso over the last decade, according to GasBuddy.
A barrel of west Texas crude oil – which is refined into gasoline – sold for around $79 on Wednesday, a slight increase from a month ago but well below a year ago, when crude prices topped $93. Strong U.S. oil production could be helping to keep crude prices from rising after the nation’s oil output last week – 12.8 million barrels per day – was the highest in any week since early 2020, just before the onset of the COVID-19 pandemic.
Despite that, U.S. stockpiles of gas are below the five-year average for this time of year. And AAA said extreme heat last month caused outages at some Gulf Coast refineries, temporarily knocking out 500,000 barrels per day of refining capacity.
Saudi Arabia and Russia, two of the world’s biggest oil producers, also opted to cut their oil output this summer to keep oil prices from falling globally. The two nations implemented the production cut to offset elevated oil production in the U.S., Canada, Brazil and elsewhere, said Garrett Golding, a senior business economist with the Federal Reserve Bank of Dallas.
“We’re starting to see a supply and demand imbalance that we weren’t seeing in the first half of the year,” Golding said. “And this is primarily attributable to the OPEC cuts.”
And demand for gasoline in the U.S. is higher today than this time last year, the U.S. Energy Information Administration reported Wednesday. The relatively lower stocks of gas and elevated demand have helped to push up prices at the pump.
Demand for gasoline can rise ahead of the Labor Day weekend, when millions of Americans hit the road for vacation – an indication the surge in fuel prices could continue in the coming weeks.
And Golding said the rise in gas prices isn’t unique to El Paso – it’s happening nationwide.
“The increase that we’ve seen in El Paso over the last few weeks is virtually right in line with what’s being seen nationally,” Golding said. “So it doesn’t seem like there’s anything out of the ordinary.”
However, there’s one reason to hope gas prices will fall some over the next month, according to Patrick De Haan, head petroleum analyst with GasBuddy.
By Sept. 15 each year, the Environmental Protection Agency requires gasoline refiners to switch the “blend” – or the chemical composition – of gasoline they sell from summer seasonal ingredients to a winter blend.
Over summer, heat and sunlight react with pollutants – such as nitrogen oxides, or NOx – to form ozone, which can cause respiratory problems such as asthma in humans.
But during winter, when environmental regulators are less worried about heat leading to ozone concentration, refiners produce the winter gas blend with cheaper ingredients, which can lower the cost of gasoline.
The biggest difference between the two seasonal gas blends “is winter gasoline has more butane,” De Haan said on a podcast last week.
“Butane has been very plentiful, it’s cheap, but it also emits more air pollution. And in the summer season, when ozone is regulated, you can’t have as much cheap butane in gasoline,” De Haan said, adding the switch to winter blend gasoline should “bring prices down a bit.”
“And your car probably doesn’t notice any difference at all,” he said.
With average prices at $3.24 per gallon, the McAllen-Edinburg-Mission area in south Texas had the lowest gas prices in the state. The cheapest gas throughout the U.S. on Wednesday was in Monroe, Louisiana, where a gallon cost $3.18 on average, according to GasBuddy.