ORLANDO, Fla. – Crude oil prices on last Friday increased $10 a barrel, leading to a 25-cent jump at the gas pumps, which you may have noticed on Monday.
That’s according to AAA.
Oil prices account for half of what you pay at the gas pump, and continued uncertainty in the Middle East means customers need to brace for higher prices in the foreseeable future.
On Monday morning, the average price for a gallon of regular unleaded gas in Florida was $3.49, but customers in the Orlando area reported seeing $3.59 a gallon at some stations.
The average gas price in Florida on Thursday was up to $3.718 a gallon, according to AAA.
“It’s a constantly moving roller coaster ride that we’re on right now with oil prices, and we’re hoping that they stabilize sometime soon because as they keep moving higher, that drags the cost of buying and selling gasoline much higher as well,” said Mark Jenkins, a spokesperson with AAA.
Crude oil futures were around $93 a barrel around midday Thursday. By comparison, oil prices were hovering around $60 a barrel on Feb. 12.
“About half the price of what we pay at the pump is influenced by crude oil prices,” Jenkins said. “And when crude oil prices skyrocket like they are, that raises the cost of producing gasoline, and then the cost to acquire it by retailers. And when it costs more for retailers to get the gas, then they have to pass along that added cost on to their consumers.”
In fact, according to the U.S. Energy Information Administration and the Florida attorney general’s office:
- Crude oil: 49%
- Federal/State/Local taxes: 26%
- Refining: 15%
- Marketing/distribution/profits: 10%
Those crude oil prices are based on future supply and demand, so the uncertainty becomes baked into the cost.
Right now, oil tanker traffic in the Strait of Hormuz, one of the most important shipping lanes for oil in the world, is effectively closed because of the continued conflict in Iran, which began earlier this month. Kuwait and other oil-producing countries have cut production because of that.
On Thursday, the new Iranian supreme leader, Mojtaba Khamenei, said the strait would remain closed.
“Certainly, the leverage of blocking the Strait of Hormuz must continue to be used,” Khamenei said Thursday. “And opening other fronts where the enemy is highly vulnerable, if the war continues, will be considered while observing strategic interests.”
Americans have seen this play out before.
The last time oil prices hit $120 a barrel was in 2022, after Russia invaded Ukraine and the United States levied sanctions.
Before that, oil prices hit $140 a barrel in 2008 — a few months before the economic crash that sent gas prices below $2 a gallon by the holidays.
Jenkins believes Florida could see $4 a gallon by the weekend, but it will depend on what happens in the Middle East.
“We could have another 25-cent increase on the way, and that doesn’t even take into consideration whatever increase we see in crude oil prices on Monday,” Jenkins said.
Florida’s increase over the last week is the fourth-highest in the country, at more than 60 cents since the fighting in Iran began over a week ago.
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