NATIONAL NEWS

Several factors are converging to push gas prices higher

Jun 11, 2022, 7:47 PM | Updated: Jun 25, 2022, 8:54 pm
An Exxon Mobil gas pumping station is seen on June 09, 2022 in Houston, Texas. Gas prices are breac...
An Exxon Mobil gas pumping station is seen on June 09, 2022 in Houston, Texas. Gas prices are breaching record highs as demand increases and supply fails to keep up. There are now over 10 states where the average price of gasoline is $5 a gallon or higher. (Photo by Brandon Bell/Getty Images)
(Photo by Brandon Bell/Getty Images)

DALLAS (AP) — There is little evidence that gasoline prices, which hit a record $5 a gallon on Saturday, will drop anytime soon.

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 for the high cost of filling up.

Some blame President Joe Biden. Others say it’s because Russian President Vladimir Putin recklessly invaded Ukraine. It’s not hard to find people, including Democrats in Congress, who accuse the oil companies of price gouging.

As with many things in life, the answer is complicated.

WHAT IS HAPPENING?

Gasoline prices have been surging since April 2020, when the initial shock of the pandemic drove prices under $1.80 a gallon, according to government figures. They hit $3 in May 2021 and cruised past $4 this March.

On Saturday, the nationwide average for a gallon ticked just above $5, a record, according to auto club AAA, which has tracked prices for years. The average price jumped 18 cents in the previous week, and was $1.92 higher than this time last year.

State averages ranged from $6.43 a gallon in California to $4.52 in Mississippi.

WHY IS THIS HAPPENING?

Several factors are coming together to push gasoline prices higher.

Global oil prices have been rising — unevenly, but sharply overall — since December. The price of international crude has roughly doubled in that time, with the U.S. benchmark rising nearly as much, closing Friday at more than $120 a barrel.

Russia’s invasion of Ukraine and the resulting sanctions by the United States and its allies have contributed to the rise. Russia is a leading 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.

Tighter oil and gasoline supplies are hitting as energy consumption rises because of the economic recovery.

Finally, Americans typically drive more starting around Memorial Day, adding to the demand for gasoline.

WHAT CAN BE DONE TO GET MORE OIL?

Analysts say there are no quick fixes; it’s a matter of supply and demand, and supply can’t be ramped up overnight.

If anything, the global oil supply will grow tighter as sanctions against Russia take hold. European Union leaders have vowed to ban most Russian oil by the end of this year.

The U.S. has already imposed a ban even as Biden acknowledged it would affect American consumers. He said the ban was necessary so that the U.S. does not subsidize Russia’s war in Ukraine. “Defending freedom is going to cost,” he declared.

The U.S. could ask Saudi Arabia, Venezuela or Iran to help pick up the slack for the expected drop in Russian oil production, but each of those options carries its own moral and political calculations.

Republicans have called on Biden to help increase domestic oil production — for example, by allowing drilling on more federal lands and offshore, or reversing his decision to revoke a permit for a pipeline that could carry Canadian oil to Gulf Coast refineries.

However, many Democrats and environmentalists would howl if Biden took those steps, which they say would undercut efforts to limit climate change. Even if Biden ignored a big faction of his own party, it would be months or years before those measures could lead to more gasoline at U.S. service stations.

At the end of March, Biden announced another tapping of the nation’s Strategic Petroleum Reserve to bring down gasoline prices. The average price per gallon has jumped 77 cents since then, which analysts say is partly because of a refining squeeze.

WHY IS U.S. REFINING DOWN?

Some refineries that produce gasoline, jet fuel, diesel and other petroleum products shut down during the first year of the pandemic, when demand collapsed. While a few are expected to boost capacity in the next year or so, others are reluctant to invest in new facilities because the transition to electric vehicles will reduce demand for gasoline over the long run.

The owner of one of the nation’s largest refineries, in Houston, announced in April that it will close the facility by the end of next year.

WHO IS HURTING?

Higher energy prices hit lower-income families the hardest. Workers in retail and the fast-food industry can’t work from home — they must commute by car or public transportation.

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 up to motorists themselves — by driving less, they would reduce demand and put downward pressure on prices.

“There has got to be some point where people start cutting back, I just don’t know what the magic point is,” said Patrick De Haan, an analyst for the gas-shopping app GasBuddy. “Is it going to be $5? Is it going to be $6, or $7? That’s the million-dollar question that nobody knows.”

HOW ARE DRIVERS COPING?

On Saturday morning at a BP station in Brooklyn, New York, computer worker Nick Schaffzin blamed Putin for the $5.45 per gallon he was shelling out and said he will make sacrifices to pay the price.

“You just cut back on some other things — vacations, discretionary stuff, stuff that’s nice to have but you don’t need,” he said. “Gas you need.”

At the same station, George Chen said he will have to raise the prices he charges his customers for film production to cover the gas he burns driving around New York City. He acknowledged that others aren’t so fortunate.

“It’s going to be painful for people who don’t get pay increases right away,” he said. ”I can only imagine the families who can’t afford it.”

___

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

KSL 5 TV Live

Top Stories

National News

U.S. President Joe Biden awards the Medal of Honor to Army Specialist 5 Dwight W. Birdwell during a...
DARLENE SUPERVILLE, Associated Press

Biden awards Medal of Honor to 4 for Vietnam War heroism

President Joe Biden has bestowed the nation’s highest military honor to four Army soldiers for heroism that he says went above and beyond the call of duty during the Vietnam War.
16 hours ago
Protesters from "Just Stop Oil" climate protest group glue their hands to the frame of a copy of Le...
Associated Press

UK climate protesters glue themselves to gallery paintings

Climate change protesters targeted a copy of Leonardo da Vinci's “The Last Supper” at London's Royal Academy of Arts Tuesday, gluing themselves to the painting's frame and spray-painting “No New Oil” next to it.
16 hours ago
The SHOCKWAVE jet truck at Hill Air Force Base during the 2022 Warrior over the Wasatch Air and Spa...
Sharif Paget and Dakin Andone, CNN

Stunt truck with jet engines crashes at Michigan air show, killing driver

A jet-powered stunt truck spun out of control and crashed at an air show in Battle Creek, Michigan, killing the driver, according to police and footage of the incident.
16 hours ago
FBI agents work the scene of a shooting at a Fourth of July parade on July 5, 2022 in Highland Park...
MICHAEL TARM, KATHLEEN FOODY and ROGER SCHNEIDER, Associated Press

Police: Gunman fired more than 70 rounds at July 4 parade

Police say the gunman who attacked an Independence Day parade in suburban Chicago fired more than 70 rounds with an AR-15-style gun that killed at least six people.
16 hours ago
22 June 2022, Baden-Wuerttemberg, Rottweil: The lettering Euro can be seen on a 1-Euro coin next to...
Julia Horowitz, CNN Business

Europe hasn’t been this cheap for Americans in decades

If you're an American visiting Italy, Greece or Spain this summer, you're in luck: Meals, hotels and tours are more affordable in dollars than they've been in two decades.
16 hours ago
Subway Sandwich...
Jordan Valinsky, CNN Business

Subway is redesigning its menu

Subway is launching a new menu, and it's the most extensive makeover in the company's nearly 60-year history.
16 hours ago

Sponsored Articles

hand holding 3d rendering mobile connect with security camera for security solutions...
Les Olson

Wondering what security solutions are right for you? Find out more about how to protect your surroundings

Physical security helps everyone. Keep your employees, clients, and customers safe with security solutions that protect your workplace.
Many rattan pendant lights, hay hang from the ceiling.Traditional and simple lighting....
Lighting Design

The Best Ways to Style Rattan Pendant Lighting in Your Home

Rattan pendant lights create a rustic and breezy feel, and are an easy way to incorporate this hot trend into your home decor.
Earth day 2022...
1-800-GOT-JUNK?

How Are You Celebrating Earth Day 2022? | 4 Simple Ways to Celebrate Earth Day and Protect the Environment

Earth Day is a great time to reflect on how we can be more environmentally conscious. Here are some tips for celebrating Earth Day.
Get Money Online...

More Ways to Get Money Online Right Now in Your Spare Time

Here are 4 easy ways that you can get more money online if you have some free time and want to make a little extra on the side.
Lighting trends 2022...

Lighting Trends 2022 | 5 Beautiful Home Lighting Trends You Can Expect to See this Year and Beyond

This is where you can see the latest lighting trends for 2022 straight from the Lightovation Show at the Dallas World Trade Center.
What Can't You Throw Away in the Trash...

What Can’t You Throw Away in the Trash? | 5 Things You Shouldn’t Throw in to Your Trash Can

What can't you throw away in the trash? Believe it or not, there are actually many items that shouldn't be thrown straight into the trash.
Several factors are converging to push gas prices higher