Several factors are converging to push gas prices higher

Several factors are converging to push gas prices higher thumbnail

DALLAS There is little evidence that gasoline prices will drop soon, as they hit a record high of $5 per gallon on Saturday.

Rising prices at the pump are a key driver in the highest inflation that Americans have seen in 40 years.

Everyone seems to have a favorite villain because of the high price of filling up.

Some blame President Joe Biden . Others believe it’s because Russian President Vladimir Putin recklessly invaded Ukraine. It’s easy to find people, even Democrats in Congress, who accuse oil companies of price gouging.

As with many things in life the answer is complex.

WHAT’S GOING ON?

Gasoline has been on the rise since April 2020,, when the initial shock from the pandemic drove prices below $1. 80 per gallon, according government figures. They reached $3 in May 2021, and soared to $4 in March.

On Saturday the national average for a gallon was just above $5. This is a record according to AAA, an auto club that has been tracking prices for years. The average price jumped 18 cents in the previous week, and was $1. 92 was higher than at this time last year.

State averages ranged between $6. 43 a gallon in California to $4. 52 is Mississippi.

WHY IS THIS HAPPENING

Several factors are working together to push gasoline prices up.

Since December, global oil prices have been increasing — not evenly, but steadily overall. The international crude oil price has nearly doubled over that period, and the benchmark U.S. oil price was almost as high, closing Friday at more $120 per barrel.

The rise in oil prices has been attributed to Russia’s invasion and subsequent sanctions by the United States of America and its allies. Russia is a major oil producer.

The United States is the world’s largest oil producer, but U.S. capacity to turn oil into gasoline is down 900,000 barrels of oil per day since the end of 2019, according to the Energy Department. The economic recovery is causing tighter oil and gasoline supplies.

Americans tend to drive more around Memorial Day, increasing gasoline demand.

WHAT CAN BE DONE TO GET MORE OIL? Analysts agree that there aren’t any quick fixes. It’s a matter supply and demand and can’t be increased overnight.

As sanctions against Russia become more widespread, oil supplies will only get tighter. European Union leaders have pledged to ban all Russian oil by the end this year.

The U.S. has already imposed an oil ban, even though Biden acknowledged that it would impact American consumers. He stated that the ban was necessary to ensure that the U.S. doesn’t subsidize Russia’s war on Ukraine. He declared that “Defending freedom will cost” The U.S. could ask Saudi Arabia or Venezuela to pick up the slack in order to offset the expected drop of Russian oil production. However, each option has its own moral and political consequences.

Republicans called on Biden for help in increasing domestic oil production, such as by allowing drilling to be done on federal lands, offshore, or reversing his decision not to allow a pipeline to transport Canadian oil to Gulf Coast refineries.

But many Democrats and environmentalists would protest if Biden took such steps, as they believe it would undermine efforts to limit climate change. Even if Biden didn’t listen to a large faction of his party, it would take months or even years before these measures could result in more gasoline at U.S. stations.

At the end of March, Biden announced another tap of the nation’s Strategic Petroleum Reserve in an effort to lower gasoline prices. Analysts believe that the average price per gallon has risen 77cs since then. This is partly due to a refining squeeze.

WHY ARE U.S. REFINING DOWN

Refineries that produce gasoline, jet fuel and other petroleum products were shut down in the first year after the pandemic. Some refineries will increase capacity over the next year, but others are reluctant to invest because electric vehicles will decrease gasoline demand in the long-term.

The owner of Houston’s largest refinery announced in April that it would close the facility by next year.

WHO ARE YOU HELPING?

Lower-income families are most affected by higher energy prices. Retail and fast-food workers can’t work from their homes. They must commute by car or public transport.

The National Energy Assistance Directors Association estimates that the 20% of families with the lowest income could be spending 38% of their income on energy including gasoline this year, up from 27% in 2020.

WHEN WILL IT END

It could be motorists themselves. By driving less, they would reduce the demand and lower prices.

” “There has to be a point when people start cutting back. I just don’t know where that magic point is,” Patrick De Haan, an analyst at GasBuddy’s gas-shopping app GasBuddy, said. Is it going to cost $5? Is it going be $6 or $7? This is the question that will make millions of dollars. .”

HOW DO DRIVERS COPING?

On Saturday morning, Nick Schaffzin, a computer worker, blamed Putin for the $5. 45 per gallon he was shelling out and said he will make sacrifices to pay the price. He said that he would cut back on vacations, discretionary items, and other stuff that is nice but not necessary. “Gas you require .”

George Chen stated that he will have raise the prices he charges customers for film production in order to pay for the gas he uses driving around New York City. He acknowledged that not everyone is as fortunate.

” “It’s going be painful for people that don’t get raises right away,” he stated. “I can only imagine the families that can’t afford it. “

——

Julie Walker in Brooklyn, New York, contributed to this report.

Read More