The national average price for a gallon of regular gasoline surged by 4 cents on Tuesday to $3.64, according to AAA.
That marks the biggest one-day increase since June 7, 2022, according to a CNN review of AAA data. However, gas prices are much lower today than they were last summer, when they spiked above $5 a gallon.
“All of a sudden, things have popped up after a long period of low prices,” said Andy Lipow, president of Lipow Oil Associates.
As recently as July 4, gas prices had experienced a nearly unprecedented year-over-year decline.
The unwelcome shift higher in pump prices follows a jump in oil prices, which have climbed to three-month highs as part of a broader rally in commodities. Wheat and corn prices have rallied after Russian attacks on port infrastructure in Ukraine.
The timing is tricky.
Cooling inflation, driven in part by easing gas prices, has raised hopes that the United States can avoid a recession. Investors are betting the Federal Reserve will soon be able to wrap up its inflation fight. And consumers have been feeling better, with consumer confidence hitting a two-year high in July.
A return of higher food and fuel prices could unravel those positive trends.
To be sure, gas prices are still down by 72 cents a gallon from a year ago. And the national average remains far from the record high of $5.02 a gallon last June.
Still, gas prices have increased by 8 cents over the past week.
Lipow blamed two powerful forces: OPEC and Russia cutting production, and extreme heat.
Since last fall, Saudi Arabia-led OPEC and Russia have announced plans to slash output by almost 5 million barrels per day through July, according to Lipow.
Although OPEC and its allies, known as OPEC+, likely have not cut that full amount of output, whatever cuts they have implemented are starting to be felt in the market.
US oil prices jumped 2.2% on Monday to close at $78.74 a barrel — the highest close since April 24. In the span of just six weeks, oil has climbed 17%.
Extreme heat in the United States, Europe and elsewhere has also snarled some refinery operations, somewhat limiting the production of gasoline, diesel and jet fuel.
Some refineries that want to run all-out to take advantage of high profit margins may not be able to.
“Refineries, like humans, do not like it when the heat index is 115,” Lipow said.
High heat in the Middle East is forcing Saudi Arabia and other countries to burn oil to power their electrical grids.