As the rippling effects of the pandemic continue to play out in the crude oil market, Florida drivers are suffering even more pain at the pump this week. Last week, the price of crude soared on fears that an already tight global fuel market would become significantly closer this winter. And the cost of gasoline is being dragged along for the trip. Last week, Florida gas prices jumped 12 cents, from $3.05 to $3.17 per gallon. The state average ($3.17) on Sunday was the highest since October 2014.
“The recent jump at the pump is directly tied to rising futures prices,” said Mark Jenkins, spokesman, AAA – The Auto Club Group. “The higher crude price raises the cost of producing gasoline. Unfortunately, it’s not clear when these prices will come back down.” Last week, the price of US crude surged 5%. To put things in perspective, crude has hardly surpassed $75 per barrel this year. On Friday, though, it briefly traded above $80 before settling at $79.31.
Since October 2014, this was the most prominent daily settlement. Concerns about what would happen if this winter was colder than usual are driving the market right now. The problem is that natural gas costs in Europe and Asia have tripled — to the point where oil prices have surpassed $200 per barrel. As a result, speculators are concerned that the impacted countries may turn to heat and electricity generation to the oil market.
An oil market that is already suffering from a scarcity of supplies. Global output fell last year as a result of the pandemic, which led gasoline consumption to plummet. Demand has recovered this year, but oil production has not kept up. This is because the global market was oversupplied before the pandemic. Currently, demand outnumbers supply.