But in Europe, natural gas prices
have gone from below $2 per million BTU last year to as much as $55 this fall. That is the equivalent of $320 a barrel oil.
Bank of America has warned that a cold winter could boost oil demand by half a million barrels per day, lifting Brent crude to $100 a barrel. That in turn would cause more sticker shock for American drivers because gas prices are priced off Brent crude.
"We may just be one storm away from the next macro hurricane," Bank of America strategists wrote in a recent note to clients.
It's not just high natural gas prices that are playing a role here.
Chinese coal prices have hit record highs
amid flooding in northern China that forced the closure of dozens of coal mines. Coal remains the main source of energy in China, used for heating, power generation and steelmaking. China is now grappling with power shortages,
prompting the government to ration electricity during peak hours and some countries to suspend production.
Against this backdrop, gasoline prices have crept higher and higher in the United States -- adding to inflationary pressures gripping the economy.
Patrick De Haan, head of petroleum analysis at GasBuddy, said $3.30 gas prices nationally are likely around the corner.
"Looking out on the horizon, I really don't see an organized drop in prices," said De Haan. "The market is starting to feel explosive. The fundamentals are there for that to continue."
OPEC in the driver's seat
While demand is strong, oil supplies have simply not kept pace.
US oil production has been slow to rebound from Covid -- even as prices have surged. Many US oil companies are leery of once again oversupplying the market and they are far more focused on returning cash to shareholders who have lost gobs of money over the past decade.
Despite the White House's calls for OPEC and its allies to significantly ramp up production, the group has only gradually increased output sidelined in early 2020. For now, they seem content to let oil prices remain elevated.
"They have always been the swing producer," said Kpler's Smith, "but my gosh they certainly hold the power right now."
source: by Matt Egan, CNN business