Patrick De Haan, GasBuddy Head of Petroleum Analysis, joins Yahoo Finance Live to discuss average gas prices for Americans, elevated prices in California, Florida's gas supply after Hurricane Ian, and OPEC+ production goals.
SEANA SMITH: Higher prices at the pump. After falling for three months in a row, gas prices keep going up, climbing for the second week in a row to $3.80 a gallon nationwide. That's the national average, according to AAA. We want to bring in Patrick De Haan, GasBuddy Head of Petroleum Analysis.
Patrick, you're the perfect person to talk to about this. You're tracking every move in gas prices. So we've seen this jump over the past two weeks. Where, though, in the country are we feeling the most pain?
PATRICK DE HAAN: That's very much a disproportionate increase. The epicenter of the biggest increase is really the West Coast. California prices now are retesting their 2022 highs. In some instances, stations are up $1 a gallon just in the last few weeks, not only in the West Coast, but areas of the Great Lakes as well where prices are up $0.50 a gallon in the last few weeks.
So really, a handful of states, Oregon, Washington, California, Nevada, and Arizona seeing the biggest increases, and that's so strong it's pulling up the national average for the first time, or the second straight week in as many as the last 16. So certainly unusual to see such a wide disparity in price behaviors across the country.
DAVID BRIGGS: Yeah, and specifically want to zero in on California. I mean, it is just eye-popping $6.38 a gallon, $2.58 more than the national average. Can you give us some of the factors that lead to such a high price at the pump in the Golden State?
PATRICK DE HAAN: We're just talking about an incredible number of refinery disruptions. Keep in mind, it's after the summer driving season. Refineries normally do maintenance this time of year. Typically, that's not a problem. But when you have another several refineries, in the instance of California, several, three refineries down unexpectedly, suddenly there's a massive crimp on gasoline supply. And that's what's causing prices in California to go sky high, so much that Governor Newsom in California eased California's stringent requirements for gasoline effective immediately.
DAVID BRIGGS: But the regulations and the taxes that they have out there in California is notable because the rest of the country seems to be following California energy policies. We saw the EV rule 2035, New York has implemented that. Colorado's already talking about it. Does this mean higher gas prices are coming to the rest of the country if we all do follow California energy policy?
PATRICK DE HAAN: Well, I think the problem with California right now is the fragmentation. Its all alone when it comes to having these stringent requirements. And so when things go well, there's not an issue. But when things don't go well, such is the situation now, they are all on their own. Refineries across the country aren't able-- or unable to ship gasoline to California that meets that standard. That's why it was eased.
But there is a cost to the cleanness of gasoline, and the policies that California has in place are really the reason why they're the only ones that are seeing prices so high. Now keep in mind, we're not even seeing anyone close to California. The statewide average in California now $6.28. The next closest is almost $1 a gallon less, Nevada at $5.28. There is a cost to the policies that California has chosen.
SEANA SMITH: Patrick, let's talk about what's happening on the East Coast, specifically the Southeast, Hurricane Ian obviously wreaking havoc over Florida and a couple of other states as well. But the number of gas stations without fuel in Florida-- I know you have been tracking this very closely-- where does this stand? And, I guess, how long until we see some noticeable improvement?
PATRICK DE HAAN: Well, we are starting to see some improvement. We did peak at about 16 and 1/2% of Florida stations without fuel. Those numbers have started to improve. And keep in mind, kind of complicating the situation is the fact that Florida's gas tax holiday just kicked into effect as well.
But every area, every major city in Florida is starting to see some improvement. The statewide number, as I mentioned, peaked at 16 and 1/2%. Now we're down close to 13%. Tampa Bay, areas of Naples and Fort Myers all seeing better numbers as supply continues to flow in as power is restored.
DAVID BRIGGS: Speaking of supply, we've heard and we've discussed a lot about the OPEC Plus potential to cut a million barrels a day. We've also got the Strategic Petroleum Reserve, at some point in the next couple of months, the US kicks that. What will be the impact on gas prices into the fall months?
PATRICK DE HAAN: Well, certainly not looking terrific, especially if OPEC does pursue a cut at this week's meeting. And that's largely expected now up to a million barrels a day that OPEC could cut production. And on that news, oil prices, a barrel of West Texas Intermediate crude oil surging nearly $4 a barrel on the prospect that the US is still going to have to fill the SPR.
But if OPEC starts chiseling away at oil production, it's going to drive up prices. And that's why you're seeing oil prices respond in kind to the likelihood that OPEC will cut production. The biggest question, though, OPEC making a move, it says, because of oil prices falling and concerns of an economic slowdown, but will that economic slowdown materialize in numbers in the months ahead?
SEANA SMITH: Patrick, if we don't see the economic slowdown significantly, I guess, materialize, what does that mean then for the price of crude? Right now we're at $83. How high could we potentially go? Above $90? Back above $100? What do you think?
PATRICK DE HAAN: Well, it's still within the realm of possibility that we get back to triple digits, especially keep in mind what happens in Europe with natural gas. Crude oil can be used to supplement natural gas. If there's any issues, if it's a cold winter, expect oil to jump in and fill the void, not only to produce power, but to produce heat.
So there still is the possibility that even if there is an economic slowdown, oil prices could see upward pressure. $90 is possible. Certainly $100 a barrel is possible. If we don't see much of an economic slowdown and we see a cold winter in Europe, that's all within the realm of possibility.
DAVID BRIGGS: All right. Patrick De Haan, GasBuddy. Always good to have you, sir. Thanks.