Gas prices are rising daily and hitting record numbers at the pump. For millions of drivers across America, this is causing real financial harship. Many people are asking why fuel is so expensive and who's to blame. Consumers want to know when they might see some relief via lower prices.
A typical family may has seen additional costs of $2,000 per year, simply due to the higher costs, according to one Wall Street estimate. On March 11, gas prices again reached a new peak, $4.24 for regular, $4.90 for premium, and $5.09 for diesel, according to the Gas Buddy app. Gas prices have been rising for more than a year and this is far from over.
Drivers did see some small relief of a few pennies per gallon when gasoline reserves, which should be saved for emergencies, were dumped on the market. Sadly, that release was only two days of what we use daily. Then prices increased and continue to do so.
Biggest Sting in California
The state of California has the highest gas prices with the highest gas taxes at over 50 cents per gallon above the national average, $4.23 a gallon on March 29, 2022, 62.4 cents higher than a month ago. In fact, throughout most of the state, gas is well above $7 a gallon. Families are budgeting for higher gas costs and cutting spending in other areas.
Some Americans are already driving less due to the higher prices. One in three adults say they reduced their car usage last month, with most blaming higher gas prices. As a reminder, gas prices were $1.94 per gallon in April 2020. This huge price increase effects every driver, every ride share, transportation of goods, food costs and literally everything we do and buy.
U.S. producers said they are boosting production, but warned that supplies could take a while to trickle through to the market and move prices at the pump.
The U.S. imports less than 10% of its oil and gas from Russia. So why are prices rising so much in the U.S. if the nation doesn't depend on Russia for fuel? The surge in gas prices is due to the larger global oil market.
Biden's First Move: Cancel Keystone XL
President Joe Biden's policies for higher gas prices were made on Day One with the administration's decision to cancel the Keystone XL pipeline, and the executive order to pause oil and gas drilling on federal land in January 2021. A federal judge in Louisiana blocked that order in June. However, we haven’t returned to energy independence.
Experts say the U.S. is producing more oil now than it was it was in 2020. Oil and gas drilling has increased, but companies in the U.S. are constrained by tight supplies of rigs, trucks and labor in order to supply more oil.
The governments emphasis on shifting away from fossil fuels and toward electric vehicles may add uncertainty for oil and gas producers, which could give them concern in boosting production.
Prices to Remain High for Months
Expect gas prices to remain high for more months. Overall inflation will likely get worse in March and April. The barrage of rising costs is taking a toll on consumers across the board. Inflation could start easing later in the year but is likely to remain high, many experts have forecasts that the inflation rate will dip to 5.5% by September. There are many variable in play that could change the rate.
If oil prices remain below $100 for a while, drivers may eventually see some relief at the pump, with prices falling below $4 a gallon. Sadly, Gas prices fall twice as slowly as they rise after a major change in oil prices. This means if it took four weeks for gas prices per gallon to increase 25 cents, it would take them eight weeks to fall 25 cents once oil prices returned to their starting level.
Some people are claiming price fixing. This is not true. There are over 14,000 gas station outlets in the country, with no single company controlling more than 5% of the market, so collusion between owners to keep prices high is unlikely true. Hence, owners wait until they see a trend in oil prices and the costs to real their tanks is what they charge. Gasoline is typically gives a minimal profit to retailers, they make more money when you buy something in their stores.
For now you can find the cheapest gas through the Gas Buddy app and club discounts. Maintain your cars and forget the drive through to get the most for your money.
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Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.
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