High Gas Prices Helped Along by High Heat Records

If you've filled up your gas tank recently, you probably noticed that prices have spiked over the past month to their highest levels in nearly a year. One of the key factors behind the July surge is record-breaking heat waves that have disrupted oil refining infrastructure and further tightened gas supplies.

This in-depth article will examine how scorching temperatures and heat-related reductions in refinery output contributed to the latest pump price increases. We'll also overview other supply and demand dynamics, what may happen next, and steps you can take to save money on fuel.

July Heat Caused Refinery Disruptions

In late July, the national average gas price jumped nearly 17 cents in a week, from $3.72 to $3.82 per gallon. This dramatic spike was driven in part by refinery outages tied to extreme heat, especially in the Gulf Coast region.

Oil refineries operate under tight temperature thresholds for processing crude oil into fuels like gasoline. When ambient temperatures exceed those limits, refineries have to dial back production to avoid overheating equipment and damaging facilities.

With July 2022 going down as the hottest month ever recorded, refineries in Texas, Louisiana, and other Southern states cut outputs by 500,000 barrels per day. That's around 3% of total U.S. refining capacity taken offline.

Less gasoline output just as summer driving demand peaks quickly translated to tightened supplies and higher prices. GasBuddy estimated nearly a quarter of the monthly price rise was heat-related.

Hot Weather Strains Refineries

While cold winter weather can also disrupt operations, extremely high temperatures in summer pose unique challenges for refineries:

• Equipment has overheating thresholds based on design limits
• Cooling water sources and discharge become warmer
• Workers face dangerous conditions
• Fire risks increase with hotter processes

Refineries near Gulf Coast areas like Texas and Louisiana are especially prone to summer disruptions as inland heat combines with high humidity.

The July 2022 heat waves exceeded design limits at multiple refineries, evidenced by reports of equipment breakdowns, storage tank overpressurization, and occasional fires.

Reducing throughput was necessary, but resulted in lost gasoline production right when drivers need it most.

U.S. Refining Capacity by Region

The U.S. has around 18 million barrels per day of refining capacity distributed across different regions:

• Gulf Coast: Over 50%, largest concentration of refineries
• Midwest: 20% of capacity, processing heavy crude
• West Coast: 10%, supplying isolated regional markets
• East Coast: 12%, but at risk of hurricane disruptions

With such a heavy concentration along the Gulf, hot summer weather can significantly impact national supply when multiple plants cut rates.

Heat Records Broken in July

Just how hot did it get? July 2022 broke thousands of heat records across the country:

• Hottest month ever recorded in U.S. and global history
• Over 15,000 record daily highs set
• Dozens of locations exceeded 115°F
• Min. temperatures remained above 80°F in many areas

Periods of excessive heat spanned several weeks in July, an unrelenting tax on infrastructure including refineries.

The extreme temperatures also resulted in increased power load for air conditioning that further stressed electricity grids.

Projected Increased Frequency of Heat Waves

The early trends are worrying - July's extreme heat is aligned with scientific projections of hotter summer temperatures driven by climate change.

If severe heat waves become more common, refined product supplies and prices could be increasingly vulnerable:

• Refineries may need costly retrofits to handle new temperature extremes
• More frequent throughput reductions on hot days
• Tighter inventory buffers to absorb disruptions
• Greater price volatility amidst supply uncertainty

Adapting refineries and infrastructure will be crucial to meeting fuel demand in an era of more intense summer heat episodes.

Other Factors Behind the July Price Jump

While heat-induced refinery outages were a major contributor, other factors also drove the big price spike in July:

• Rising oil prices - Crude increased from ~$70 to over $90 per barrel.
• Low gasoline inventories - Down 6% vs 5-year average for July.
• Peak summer driving demand - Vacations and holiday demand surging.
• Geopolitical tensions - Supply concerns over OPEC cuts, Russia.

These dynamics amplified the impact of reduced refining output. The combination overwhelmed supply in the face of strong seasonal gasoline demand.

Gas Price Outlook for August and Fall

Where do gas prices go from here? Some key factors that may influence costs this month and into fall:

• Refinery recovery - Full capacity should be restored soon.
• Demand decline post-peak summer - Prices often drop as demand moderates.
• Hurricane season - Storms may affect Gulf refineries.
• Inflation trends - Rising consumer prices could sap demand.
• Geopolitical issues - Potential for more supply disruptions.

Barring major new supply threats, the stage may be set for reductions from the summer highs. But as always, the market is susceptible to quick shifts.

Saving Money as Gas Prices Fluctuate

With pump prices remaining volatile, here are some tips to stretch your gas dollars:

• Shop around and compare prices using apps like GasBuddy
• Pay with discount gas cards or reward credit cards
• Enroll in fuel discount programs like Kroger, Safeway, etc.
• Maintain proper tire pressure and get engine tuned up
• Modify driving style to be smoother and less aggressive
• Reduce unnecessary trips and consolidate errands
• Shop at low-cost warehouse stores like Costco or Sam's Club

Staying flexible and savvy can help offset the impact of factors outside of your control like refinery outages and global oil supply chains.

The Takeaway

July's extreme heat strained refineries and directly contributed to reduced gasoline output and higher prices at the pump. With summer heat projected to intensify in the long term, adapting refining and energy infrastructure to new temperature extremes will become increasingly imperative.

In the near term, the silver lining is that refineries should bounce back, demand may moderate after summer, and prices often decrease post-Labor Day. But with geopolitics and hurricane season still in play, a hot summer could extend its impact on gas costs into fall 2022 and beyond.

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