The Social Security cost-of-living adjustment for 2024 will be a paltry 3%, analysts estimate — a dramatic drop from 8.7%. But here's one unexpected factor that could bump it higher

Experts fear these storms may hit oil refineries along the Gulf Coast.

“A major storm impacting the Gulf Coast and nearby refineries will likely lead to a spike in gas prices for a few weeks,” AAA spokesperson Andrew Gross told CNBC.

Such circumstances could affect the 2024 COLA.

“The COLA estimate will go up if the price of gasoline jumps considerably,” Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League (TSCL), told the news outlet. “The COLA estimate might go down if gas and oil prices drop.”

How gas prices are tied to the COLA

Each year, the COLA is calculated based on a subset of the Consumer Price Index (CPI) called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W tracks the cost of many common expenses, such as food, housing and transportation.

The formula specifically looks at the average third-quarter (July, August and September) CPI-W figures. The Bureau of Labor Statistics released its July CPI report on Aug. 10, showing the CPI-W increased 2.6% over the previous 12 months.

If gas prices spike at any time in August and September, it could increase the final COLA figure.

Seniors already expecting decreased COLA

The Senior Citizens League (TSCL) estimates that the 2024 COLA will be far lower than the previous year.

The 2023 COLA was 8.7% thanks to high inflation. But with inflation now cooling, TSCL estimates a 3% COLA for 2024. This would increase Social Security beneficiaries’ average monthly benefit by $53.50, from $1,787 to $1,840.