Opinion: Blaming Rising Fuel Prices on High Temps is Dumb

Matt Posky
by Matt Posky

opinion blaming rising fuel prices on high temps is dumb

With average fuel prices creeping back up, you’ve undoubtedly seen a slew of articles trying to explain why. The trend seems to be to just blame it on warm weather. 

Over the past week, countless media outlets published stories about how oil refineries have had to scale back production targets to contend with exceedingly high temperatures. But is this really the keystone issue for why you’re once again contending with undesirable fuel prices? 

Legacy media outlets certainly seem to think so, as there’s a surplus of articles suggesting excessive heat is the main reason the national average is creeping back up to $4.00 per gallon. Here are examples from the Associated Press, Money, Forbes, CNN, and Car and Driver. We can even offer up pieces from Bloomberg that predicted growing fuel stockpiles would be undermined by sustained temperature increases that hadn’t even happened yet. 

The explanation varies but usually comes down to a few issues: Fuel demand tends to increase over the summer months as people do more traveling. Meanwhile, increased temperatures lead to increased air conditioning use that draws more energy from the grid — 60 percent of which is powered by fossil fuels inside the U.S. 

This is true every single year. However, with portions of the country seeing near-record temperatures in what has been called a global heat wave, refineries based near the Gulf of Mexico have reportedly had to scale back production. 

AAA spokesperson Andrew Gross told the Associated Press that Americans have actually been driving less than usual this summer, making it somewhat surprising that fuel prices have reached a nine-month high following a two-year stint of consistent elevation ending in July of 2022. 

“Usually it takes a hurricane to move prices that much,” he said. 

From AP

“While the heat may be keeping people home, [it] also keeps refineries from making refined product,” Gross explained, noting that refineries are typically designed to operate between 32 and 95 degrees Fahrenheit (0 and 35 degrees Celsius). “They don’t like temperature extremes because they’re inherently dangerous places... So they dial back the production for safety purposes, but that then constrains supply.”
According to Kloza, there are about 10 million daily barrels of U.S. refining capacity on the Gulf Coast. The heat wave has caused those refineries to operate below normal capacity — resulting in a loss of hundreds of thousands of barrels each day, he said.
Still, “the fact that some refineries are struggling has meant that the ones who are able to operate are making really nice profits,” he said. Today’s U.S. domestic demand is about 9 million barrels a day, about a half a million below expectations for peak summer months, but the country is exporting a lot of gasoline, he added.
Beyond the heat, Kloza pointed to crude supply cuts from major producing countries in the OPEC+ alliance. In July, for example, Saudi Arabia starting reducing how much oil it sends to the global economy by 1 million barrels each day. Russia is also exporting less, he said.

OPEC has often been criticized for curtailing production as a way to maximize profits. But Western suppliers do likewise and the practice is hardly limited to any singular industry. Though some outlets did make assertions about how foreign energy concerns have similarly been affected by excessive heat. It’s often the key argument for why you’re paying more at the pump — apparently, it’s all about climate change. 

CNN suggested that energy companies have “every incentive” to churn out as much fuel as possible right now because profit margins are so high. However, heat can also complicate maintenance efforts at refineries and slow down the overall process. It’s not that the companies cannot continue producing at higher temperatures, it’s that their efficiencies begin to dwindle — which ultimately eats into those extremely juicy profit margins. Ultimately, the news outlet effectively attributed the whole thing to climate change:

From CNN

Ironically, all of this shows that not even oil and gas companies — an industry that scientists blame in part for global warming — are immune from the consequences of the climate crisis. And consumers are suffering the consequences as gas prices rise, a development that threatens to undo some of the progress made on the inflation front across the economy.

While a little hard to swallow the premise that oil and gas companies are suffering when you look at their profit reports, I’m absolutely willing to believe that human activities impact the environment. It would be shocking to learn otherwise. However, climate concerns have become a convenient excuse for just about everything these days. Entire industries have taken a blame-it-on-the-rain approach when it comes to addressing public concerns. 

Why have vehicles gotten so expensive? Supply chain issues that have lingered in the wake of the pandemic. Why are per-gallon fuel prices so high? Uh, let’s say that the weather is just getting too darn hot. 

The above aren’t lies. But they’re also not giving you the larger picture. It’s a lot like when you have to explain why you’re late to a social event. All the people upset with you need to know is that there was traffic that slowed your progress. While the statement is true, it ignores the fact that you wanted to finish doing something at home and then wasted another 15 minutes trying to decide whether you were even going. The traffic simply made you later than you already would have been and you don’t want anyone that you also spent an excessive amount of time in the shower before fighting with your spouse about how you just wanted to stay home in the first place.

Let’s pretend we’re all adults capable of independent thought for a moment. If the oil industry is truly hamstrung by logistical issues created by climate change, it probably would not be enjoying such staggering profitability.

Last year represented record-setting profits for the energy sector around the globe. But, according to NASA, it was tied with 2015 as the 5th hottest year since 1880. This is particularly interesting, as 2015 also happened to be the year the broader industry saw profitability hitting its lowest point in roughly a decade. Major oil companies were likewise witnessing a fall in stock valuations as the per-barrel price of oil remained low. This also translated to lower fuel prices at the pump with the national average for regular gasoline staying somewhere between $1.76 and $2.89 per gallon from 2015 through 2020. 

Things changed late in 2020. While the Biden administration expressed a strong desire to push the United States toward all-electric vehicles and impose higher efficiency standards on new combustion models, something that would presumably lessen national oil consumption, it also claimed it would curtail domestic drilling. It has certainly thrown a lot of government money toward EVs. But drilling permits have ultimately been issued at a higher pace than what was seen under the Trump administration. 

Oil prices spiked dramatically following the 2020 presidential election. Expected policy changes were the common excuse and the United States saw escalating fuel prices before the Biden administration had even taken office. The national average rose by over a dollar per gallon by November of 2021 and continued to climb at that pace (or faster) through 2022. 

The Russo-Ukrainian War further complicated matters as Russian energy stopped making its way into NATO-affiliated nations. Meanwhile, the Biden administration elected to tap into the United States Strategic Petroleum Reserve under the auspices of lowering fuel prices. While the Treasury Department alleged this lowered costs by anywhere from 17 cents to 42 cents per gallon, overall energy prices have remained high. 

Part of this can be blamed on Western oil providers trying to swoop in on markets that had previously gotten their energy from Russia. While the economic ramifications of warfare are often difficult to process at the moment they occur, there’s always someone looking to turn a profit. In 2020, the United States became a net exporter of petroleum for the first time in decades. 

Total petroleum exports were greater than total petroleum imports in 2020, 2021, and 2022. Despite domestic production having likewise increased, the sheer volume of oil being shipped out of the country means the country needs to import more fuels to satiate domestic demand. While this is undoubtedly more profitable for oil companies, it’s also less environmentally sound and has likely helped guarantee the high fuel prices we’re now confronted with.

You’re unlikely to see this in a headline, but corporate greed is intensely relevant here. These companies have investors prepared to dump their stock if they think the needle is moving in the wrong direction. In 2022, the Federal Reserve Bank of Dallas published an industry survey where 60 percent of respondents claimed "investor pressure to maintain capital discipline" is why oil producers failed to increase production.

We could go down this rabbit hole forever, as there is no shortage of factors that contribute to fuel pricing. Inflation is mentioned as an afterthought in almost every article tackling the issue. But it’s undoubtedly impacting various nations’ purchasing power as everyday people endure a period of economic turmoil. 

Even the mere fact that modern gasoline is less shelf stable than its predecessor (blame ethanol-blended fuels) plays a role. But the premise that hotter-than-average temperatures are the main issue in why you’re having to take out a loan to keep your daily driver fully fueled is absolutely ridiculous. Refinery downtime absolutely matters and excessive heat can influence how much there is. However, it’s hardly the core issue and anyone telling you differently has failed to present you with a serious, nuanced answer. 

The good news is that demand declines as we head into the autumn months and it typically means a lowering of fuel prices. While we didn’t end up seeing that happen in 2020-2021, last year returned to normal trends even as energy prices reached record highs. Maybe we’ll be lucky enough to see that happen again. However, we’re a long way from prices settling back into the savory lows enjoyed before 2020. 

[Image: Siripatv/Shutterstock]

Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by subscribing to our newsletter.

Join the conversation
8 of 165 comments
  • El scotto El scotto on Aug 09, 2023

    Now old Tassos and ebFlex may be worried about lubrication (man-type) and oil (whip-type) increasing in price. They could be buying in bulk and saving big.

  • Bd2 Bd2 on Aug 10, 2023

    Quite the SPIN from MP (which isn't surprising).

    The news outlets are only reporting what industry experts and insiders are saying - and they all pretty much state that it's the cutbacks in oil production by OPEC+ along with reduced refinery operation due to high temps.

    That's hardly "dumb" (unlike the attempt to spin it).

    Gas prices spiked in Arizona last fall and then again this past February.

    The reasons were California refineries (which supply the Phoenix region) cutting back on production for "maintenance" and then Texas refineries (which supply the Tucson area) having to deal with the deep freeze.

    Now, maybe MP should vent on what actually keeps the price of gas higher (historically) relative to the cost of oil - the record levels of EXPORTS of refined fuels, as refineries can often get a better price abroad and in doing so, limit the domestic supply.

    It's the main reason why the price of gas in California remains stubbornly high despite significantly lower gas demand than 5 years ago.

    • See 3 previous
    • RHD RHD on Aug 17, 2023

      The oil companies have a laundry list of excuses to raise prices. If it isn't one thing, it's another. And "maintenance" is a joke. Just have a look at Valero Refinery incidents.

  • Dusterdude The "fire them all" is looking a little less unreasonable the longer the union sticks to the totally ridiculous demands ( or maybe the members should fire theit leadership ! )
  • Thehyundaigarage Yes, Canadian market vehicles have had immobilizers mandated by transport Canada since around 2001.In the US market, some key start Toyotas and Nissans still don’t have immobilizers. The US doesn’t mandate immobilizers or daytime running lights, but they mandate TPMS, yet canada mandates both, but couldn’t care less about TPMS. You’d think we’d have universal standards in North America.
  • Alan I think this vehicle is aimed more at the dedicated offroad traveller. It costs around the same a 300 Series, so its quite an investment. It would be a waste to own as a daily driver, unless you want to be seen in a 'wank' vehicle like many Wrangler and Can Hardly Davidson types.The diesel would be the choice for off roading as its quite torquey down low and would return far superior mileage than a petrol vehicle.I would think this is more reliable than the Land Rovers, BMW make good engines. https://www.drive.com.au/reviews/2023-ineos-grenadier-review/
  • Lorenzo I'll go with Stellantis. Last into the folly, first to bail out. Their European business won't fly with the German market being squeezed on electricity. Anybody can see the loss of Russian natural gas and closing their nuclear plants means high cost electricity. They're now buying electrons from French nuclear plants, as are the British after shutting down their coal industry. As for the American market, the American grid isn't in great shape either, but the US has shale oil and natural gas. Stellantis has profits from ICE Ram trucks and Jeeps, and they won't give that up.
  • Inside Looking Out Chinese will take over EV market and Tesla will become the richest and largest car company in the world. Forget about Japanese.