Gas prices start to rise in Southwest after end of ceasefire

Both states were seeing the highest price in the nation, and it reflected a three-cent increase in California from one week ago. One month ago, the average in California was $5.68 a gallon, according to AAA.

The news was better for Hawaii, which saw a higher rate of $5.47 a gallon one week ago. Prices remain down from June when the average in Hawaii was $5.58 a gallon. 

The current start of higher prices comes after the July 8 end of the ceasefire between the U.S. and Iran, which analysts said sent global oil markets back into uncertainty. 

“Drivers recently saw some relief at the pump as crude oil prices declined, but that downward trend has been interrupted by renewed uncertainty in the global oil market,” said Kandace Redd, AAA senior spokesperson for Southern California and Hawaii.

“Rising tensions in the Middle East and disruptions in the Strait of Hormuz are putting upward pressure on crude oil prices, and those increases are filtering down to consumers at the pump," Redd said, answering The Center Square's questions by email. 

The U.S. national average price for a gallon of regular gas is once again near $4, at $3.98 as of Friday, according to AAA. That's up from $3.88 one week ago and inches closer to last month's average of $4.03 a gallon.

The price at the pump, which had fallen sharply over the past month, varied greatly across the country. In Indiana, drivers could on average find a gallon for $3.37, while motorists had to cough up more in the Southwest. On Friday, Nevada was at an average of $4.58 a gallon, the same as one week ago. Arizona was at $4.16, up from $3.91 a gallon one week ago. New Mexico saw $4.03 a gallon, up from last week's $4.01, and Utah, $4.01, up from $3.99 one week ago, according to AAA.

Colorado saw a more drastic increase. AAA reported the average there was $3.98 a gallon on Friday, up from $3.86 one week ago.

Redd said that while international oil price changes had a large impact on gas prices, states like California and Hawaii face additional local issues when considering fuel prices. 

“California also faces state-specific challenges, including reduced refining capacity following recent refinery closures, the higher cost of producing the state’s required cleaner-burning gasoline blend, seasonal summer-blend fuel requirements, and higher taxes and fees at the pump,” said Redd.

And a new report from the Institute for Energy Research shows policies made decades ago caused gas prices to rise higher in blue states such as California and Hawaii, The Center Square reported earlier this week.

Meanwhile, the U.S.-Israeli conflict with Iran, which began Feb. 28 of this year, has contributed to a global economic shock across recent months, according to the Council on Foreign Relations, a think tank. This has been felt throughout the U.S., contributing to the highest gas prices in the country since the summer of 2022, when the country was emerging from the COVID-19 pandemic and after Russia had recently invaded Ukraine.

The U.S. saw its highest price for an average gallon of regular gas in May at $4.48, according to the U.S. Energy Information Administration. The price at the pump fell week-over-week throughout June as the U.S. and Iran agreed to a ceasefire. The ceasefire included what looked to be a reopening of the Strait of Hormuz, which sees roughly 20% of global petroleum liquids pass through its narrow waterway, according to the EIA.

“All of the oil-producing countries in that area, if they are using the Strait of Hormuz to ship oil out, well that is a very tumultuous area right now,” AAA Arizona spokesperson Shawn Tempesta told The Center Square Thursday afternoon. “It's the same story that we saw a few months ago, where we saw the price of crude oil go up considerably because of all the disruption that's taking place there.”

The price of crude oil and gas is closely linked, Tempesta said. 

The cost of a barrel of West Texas Intermediate crude oil, a price benchmark, fell from an April 6 high of over $117 in recent months, but  a recent bump over the past week had taken the crude oil price past $82 as of Friday.

“While there were ceasefire talks, which were able to get prices down, it seems like those have fallen apart, at least at the moment,” said Tempesta Thursday. “And with that, the price of crude oil is flirting with $80 per barrel right now.”