Gasoline Price Increases
Rubi Orellana
The cost of gasoline has reached new highs. Why is this happening, and how long will it last?
The price meters are spinning quite a bit faster at the gas station these days as a direct result of Russia's attack on Ukraine. This conflict has reduced crude oil availability and created a severe supply-demand mismatch. According to the price-tracking service GasBuddy, the cost per gallon of gasoline in the United States has been hovering around $4.30. This surpasses the previous high of $4.10, established right before the financial crisis in 2008. Prices increased by nearly $0.49 in the first week of March, about 14%.
Customers filling up their tanks are voicing dissatisfaction with the rising expense of commuting to work, dropping their children off at school and going to see relatives. Relief for this economic agony is unlikely. Russia is the world’s largest oil exporter; as long as it continues its invasion of Ukraine, gas prices will stay high.
The price of crude oil, a.ka. generate gasoline, was being driven down by a pricing war between Russia and Saudi Arabia. Demand for gas fell as the COVID-19 virus spread, and people remained in their houses. This caused prices to fall even lower. Oil companies have substantially reduced production in order to avoid insolvency, according to Patrick De Haan, GasBuddy's head of petroleum analysis. In recent months, people began to need gas again as they ventured outside of their homes. Many have begun traveling. This sudden demand for gas has taken oil companies by surprise. Oil companies have been slow to catch up to the sharp increase in gasoline consumption, according to De Haan, after shutting down wells and laying off personnel. As a result, prices increased significantly.
The market began adding a risk assessment of the price of oil as Russia's invasion on Ukraine proceeded, causing it to jump, according to Devin Gladden, a spokesman for car club AAA and an adviser at the Energy Department under the Obama administration. Sanctions prohibiting US banks from interacting with Russian financial institutions exacerbated the effect. The Biden administration took moves on Tuesday toward outright banning Russian oil shipments. Only about 3 percent of crude oil consumed in the United States comes from Russia. However, because Russia is one of the most major oil producers, any conflict in Russia causes prices to rise globally.
How much longer will prices remain so high?
Gas prices don't always follow a linear path. Several global energy corporations, including Shell, BP, and ExxonMobil, had agreed to cease their operations in Russia even before the White House acted to restrict Russian oil imports. Those actions had already curtailed oil supply. Gas prices are expected to remain elevated as long as Russia fights in Ukraine, according to Gladden. "We're also approaching the spring and summer driving seasons, when gas prices tend to rise due to increased demand," he added. "As a result, we anticipate a pricey summer at the pump for customers this summer."
According to De Haan, the national average might hit $4.50 per gallon. The Federal Trade Commission is continuing to evaluate whether oil corporations are price gouging at gas stations, The White House asked the agency to monitor the matter last year. According to Psaki, the Biden administration isn't "ruling out or ruling in any possibilities" for cutting gas costs.
What can customers do to alleviate the financial strain?
Small changes can help to deal with the increase in gas prices. Maintaining your car's engine, completely inflating your tires, and keeping the weight of your car light can help you save money on gas. Driving behaviors are also important, according to Gillis. He claims that keeping your foot off the brake while driving can save you $1.42 per gallon. Smooth acceleration and deceleration, driving gently, and turning off the engine rather than idling the engine can also help save gas money.
When purchasing with cash, petrol costs are often a few cents per gallon lower, and some credit cards give benefits for gas purchases. According to GasBuddy, which determined that the average price across 30 states has been lowest on Mondays in 2019, Mondays are an excellent day to fill up the tank. The most expensive days are Fridays and Saturdays.
All Americans can really do is hope that gas prices will go down. Until then, employing these cost saving strategies can help.
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