In Riyadh, Suadi Arabia, gas prices are incredibly low. According to a recent report by the Washington Post, government-subsidized gas sells for just 45 cents a gallon, about the same price as water.
Meanwhile, U.S. gas prices have been inching up over the past few weeks. According to a Retail Dive analysis of the latest Lundberg Survey, this is the first increase in fuel prices the U.S. has seen since the average cost of a fill up began to decline in June 2014. Prices have gone up to an average of $2.1963 per gallon between January 23 and February 6, an increase of 12.72 cents.
Even with this increase, Lundberg found that the cost of a gallon of gas is over a dollar lower than it was a year ago.
ABC News reports that industry analyst Trilby Lundberg said that higher gas prices are the result of a rebound in the price of crude oil. The highest-priced gas in the Lower 48 can be found in San Francisco, California, where prices are around $2.59 per gallon. The report states that gas prices are lowest in Tucson, Arizona, with the average cost of a gallon of fuel at $1.82. Regular gas costs an average of $2.56 per gallon in Los Angeles, and $2.34 per gallon on Long Island, New York.
Bloomberg Business reports that crude prices fell to $44.45 a barrel on January 28, reaching their lowest point since March 2009. Since then, West Texas Intermediate crude, which is the U.S. benchmark priced in Cushing, Oklahoma, gained 13 percent, or $6.10 on the New York Mercantile Exchange.
Despite an increase in the cost of U.S. crude oil, global oil prices remain low. The Washington Post‘s report on the price of gas in Saudi Arabia says that the general response to a stunning drop from more than $100 a barrel just six months ago to about $50 today is a mere shrug.
The reason? When Americans were paying an average of $60 to fill up during the period when gas prices were close to $4 a gallon, Saudi Arabia was building its cash reserves to an incredible $750 billion.
Tariq Al-Sudairy, chief executive of Jadwa Investment, which is a private bank in Riyadh, told a reporter that the government’s cushion means Saudi Arabia can withstand a drop in oil revenues for a period of time. “The question is how long this period of low oil prices will be, and will it be long enough to force the government to make tough decision?”
Sudairy said the Saudi government is likely to monitor the cost of oil closely for about 18 months and rethink strategy if the average price does not increase further.
What does the modest increase in oil mean for drivers in the U.S.? Lundberg says gas prices could climb as much as ten cents per gallon in the near future.
[ World gas prices image via Black Sun Journal]