Gas prices hit new 2023 highs Monday as a squeeze on oil supply sent prices of refined products higher.
The national average for gasoline in the US hit $3.88, according to AAA. In Western states, prices are well above the national average. California’s average sat at $5.69 per gallon.
The price of diesel, which is used to transport goods via trucks, was up $0.23 from one month ago, at $4.57 per gallon.
Other refined products like jet fuel have also been on the rise. Several airlines including United Airlines (UAL), Delta (DAL), and American (AAL) sounded the alarm recently on lower profits amid higher fuel costs.
Higher energy costs are raising concerns of a negative impact on the broader economy at a time when the Federal Reserve is aiming to curb inflation. Fed officials are expected to hold interest rates steady when they meet this week but still keep door open to one more rate hike this year.
Energy prices, specifically gasoline, were the biggest culprit of August's hotter-than-expected Consumer Price Index print released last week.
“The oil issue, the higher gas prices — this should be a reminder to all of us that the Fed is not in charge of inflation,” Claudia Sahm, former Federal Reserve Board economist, told Yahoo Finance Live following August's CPI report.
“These are geopolitical events that are driving energy prices," she added.
Crude has been on an upward trend over the past three months. West Texas Intermediate (CL=F) has risen by about $23 per barrel since late June to settle at $91.48 on Monday.
Brent crude (BZ=F) have seen a similar rise of more than 30% over the same period. Brent futures rose fractionally on Monday to settle at $94.43 per barrel.
Saudi Arabia, a member of OPEC+, seeks to keep oil prices elevated as it aims to fund domestic initiatives in the coming years.
"I expect crude oil prices to remain above $90 per barrel as OPEC+, and specifically Saudi Arabia, seek higher prices to balance their domestic budget," Andy Lipow of Lipow Oil Associates recently told Yahoo Finance.
The Saudi government recently extended its unilateral production cuts for the next three months. Russia also reduced its exports by 300,000 barrels per day through year-end. These cuts are in addition to OPEC+ reductions announced in the fourth quarter of 2022.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.