Why drivers are paying so much for gas right now
This holiday weekend, it cost drivers about 50% more to fill up their gas tanks than during July 4 road trips last year. The national average price for a gallon of regular unleaded gas was just over $4.80 on Monday, according to AAA. A year ago, it was $3.13 per gallon.
It could be worse. The price of gas peaked in mid-June, reaching more than $5 per gallon nationally, so drivers this weekend paid about a quarter per gallon less than a few weeks ago.
That is probably little comfort for people who over the past several months have been squeezed by sharply higher fuel prices, which have pushed up inflation overall to its fastest rate in more than 40 years. And with the Russian invasion of Ukraine constraining global energy supplies, gas prices are not likely to decline much more this summer.
The biggest factor causing the spike in the cost of gas is the price of crude oil. As of May, crude accounted for nearly 60% of the price of a gallon of regular gasoline, according to the Energy Information Administration. The price of West Text Intermediate crude, the U.S. bench mark, has recently traded around $110 per barrel, up from $75 a year ago.
The price that people end up paying at the pump is the result of trading in the international market for oil and petroleum products. It comes down to supply and demand, and lately the balance between those forces has been disrupted. Expensive oil becomes expensive gas.
Although the United States is the world’s largest producer of oil and processed petroleum products, it also uses much more oil than it produces, so it buys a lot from other countries. Since the beginning of the Ukraine war, Russia, a major producer, has been selling less oil in part because of international sanctions, reducing global supplies and sending prices higher.
To address rising prices, the Biden administration has urged Congress to temporarily suspend the federal gas tax. It has also chastised oil companies for profiteering off high prices and encouraged them to boost their refining capacity. Experts say that neither move is likely to bring gas prices down any time soon.
This article originally appeared in The New York Times.
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