KEY POINTS:
- The national average cost for a regular gallon of gas may reach an all-time high this week.
- The higher prices at the pump can be attributed to the Russian invasion of Ukraine.
- Gas prices are expected to continue to rise, with the national average over $4 for much of 2022.
As national averages for a gallon of regular gas and diesel broke records in the United States this week, many are wondering how long the surge may continue and when prices at the pump will finally drop.
The dramatic rise in cost has sent drivers into a frenzy; Gasbuddy, the popular fuel-savings app that gives users the cost of gas in their area, had its online services go down temporarily on Monday because of record-breaking traffic as people look for the cheapest place to fill up their tanks.
As of Wednesday morning, the average cost for a gallon of gas in the country was $4.25, according to AAA. The price is up about 8 cents from Tuesday and more than 60 cents from last week.
Costs are expected to continue to rise throughout the year.
Here is what we know about gas prices and what to expect next:
Why are gas prices rising?
There are a few factors contributing to the increase, but the main reasons are the Russian invasion of Ukraine and the rise of inflation.
Patrick De Haan, head of petroleum analysis at GasBuddy, told USA TODAY last week that sanctions put on Russia by the U.S. and European Union severely hindered Russia's ability to sell crude oil, one of the biggest determiners for gas prices. Because the country is one of the biggest energy suppliers, crude oil prices have dramatically risen.
The cost for a barrel of crude oil had ups and downs on Monday. A barrel of U.S. crude oil settled at $119.40 a barrel, up 3.2%, after earlier touching $130.50. Brent crude, the international standard, settled at $123.21 a barrel, up 4.3%, after earlier topping $139, The Associated Press reported.
The U.S. imported about 209,000 barrels per day of crude oil in 2021, according to the White House.
While that is only 3% of the import market in the U.S., Russia plays a big role because it produces "heavier, sour crude," Ramanan Krishnamoorti, a professor at the University of Houston, said. He added Russian crude is needed because U.S. refineries are not designed to use 100% of the light, sweet crude it produces.
Another contributing factor De Haan mentioned is the loosening of COVID-19 restrictions across the country. With mandates lifted or softened, people will be out more, coinciding with the typical rise of gas costs as summer approaches.
AAA also said Monday that the increase in gas demand and a reduction in total supply contribute to rising pump prices.
How long will gas prices be this high? How high will gas prices get?
Gasbuddy projects the worst is yet to come when looking at average prices.
GasBuddy's 2022 gasoline forecast predicts the average cost of a gallon of gas will peak in May at $4.25, a price point already realized as of Wednesday morning.
Even as prices are expected to decline after May, the average is expected to remain over $4 until November. The average for 2022 is expected to be $3.99. De Haan told CNN on Tuesday the national average could reach $5 a gallon due to the situation in Ukraine.
"It’s a dire situation and won’t improve any time soon. The high prices are likely to stick around for not days or weeks, like they did in 2008, but months. GasBuddy now expects the yearly national average to rise to its highest ever recorded," De Haan said in a news release Monday.
On Tuesday, President Joe Biden announced a ban on the U.S. import of all Russian energy products, including the purchases of Russian crude oil, certain petroleum products, liquefied natural gas and coal. Experts say the decision will contribute to the cost increase.
"In the short term, you're going to see prices definitely go up," energy expert Gianna Bern said. "How much, it remains to be seen, and where and how the void gets filled."
Where is gas the most and least expensive?
Gas remains the most expensive in California, with the average cost at $5.57, the only state with an average above $5.
The most expensive county in the state is Mono County, which borders Nevada. The average cost in the county is $6.14. Stations across the state are seeing prices above $6, including a Shell gas station in Los Angeles, which had regular gas costing $6.99 a gallon.
As of Wednesday, only 15 states are averaging under $4 a gallon, primarily in the Gulf Coast and Midwest.
The states with the cheapest gas are Kansas and Oklahoma, each averaging $3.79 a gallon.
Contributing: Marina Pitofsky, USA TODAY; USA TODAY staff reports; The Associated Press
Author: Mendoza J.
For: USA Today
Original link: https://www.usatoday.com/story/money/2022/03/07/why-gas-prices-rising/9417091002/