DALLAS – There is little evidence that gasoline prices, which hit a record $ 5 a gallon on Saturday, will soon fall.
Rising bomb prices are a key factor in the highest inflation Americans have seen in 40 years.
Everyone seems to have a bad favorite for the high cost of filling up.
Some blame President Joe Biden. Others say it was because Russian President Vladimir Putin recklessly invaded Ukraine. It’s not hard to find people, including Democrats in Congress, accusing oil companies of raising prices.
As with many things in life, the answer is complicated.
WHAT IS HAPPENING?
Gasoline prices have risen since April 2020, when the initial shock of the pandemic pushed prices below $ 1.80 a gallon, according to government figures. They reached $ 3 in May 2021 and exceeded $ 4 this March.
On Saturday, the national average of one gallon exceeded $ 5, a record, according to the AAA Automobile Club, which has been tracking prices for years. The average price rose 18 cents the previous week and was $ 1.92 more than at this time last year.
State averages ranged from $ 6.43 a gallon in California to $ 4.52 a gallon in Mississippi.
WHY IS THIS HAPPENING?
Several factors come together to raise gasoline prices.
World oil prices have been rising unevenly, but sharply overall since December. The price of international crude has roughly doubled in this time, with the U.S. benchmark rising nearly as much, closing above $ 120 a barrel on Friday.
The Russian invasion of Ukraine and the consequent sanctions by the United States and its allies have contributed to the increase. Russia is a major producer of oil.
The United States is the world’s largest oil producer, but the U.S.’s ability to convert oil to gasoline has dropped 900,000 barrels of oil a day since late 2019, according to the Department of Energy.
Tighter oil and gasoline supplies are affecting as energy consumption increases due to the economic recovery.
Finally, Americans tend to drive more from Memorial Day, increasing the demand for gasoline.
WHAT CAN BE DONE TO GET MORE OIL?
Analysts say there are no quick fixes; it is a matter of supply and demand, and supply cannot be increased overnight.
In any case, the world’s oil supply is tightening as sanctions against Russia are tightened. EU leaders have vowed to ban most Russian oil by the end of this year.
The United States has already imposed a ban, although Biden acknowledged that it would affect American consumers. He said the ban was necessary to prevent the US from subsidizing Russia’s war in Ukraine. “Defending freedom will cost,” he said.
The United States could ask Saudi Arabia, Venezuela or Iran to help recover the margin for the expected fall in Russian oil production, but each of these options has its own moral and political calculations.
Republicans have called on Biden to help increase domestic oil production, for example, by allowing drilling in more federal lands and on the high seas, or by revoking his decision to revoke a permit for a pipeline that could bring Canadian oil to the Gulf Coast refineries.
However, many Democrats and environmentalists would urge Biden to take such steps, which he says would undermine efforts to limit climate change. Even if Biden ignored a large faction of his own party, it would be months or years before these measures could bring more gas to U.S. gas stations.
In late March, Biden announced another use of the country’s Strategic Oil Reserve to reduce gasoline prices. The average price per gallon has risen 77 cents since then, which analysts say is due in part to a refinement.
WHY DO WE REFINE OURSELVES?
Some refineries producing gasoline, diesel, diesel and other petroleum products closed during the first year of the pandemic, when demand collapsed. While some are expected to increase capacity over the next year, others are reluctant to invest in new facilities because the transition to electric vehicles will reduce gasoline demand in the long run.
The owner of one of the largest refineries in the country, in Houston, announced in April that it would close the facility at the end of next year.
WHO IS MISSING?
Rising energy prices are affecting more low-income families. Retail and fast food industry workers cannot work from home – they have to travel by car or public transport.
The National Association of Energy Assistance Directors estimates that 20% of lower-income households could spend 38% of their income on energy, including gasoline, this year, more than 27% on 2020.
WHEN WILL IT END?
It could depend on motorists themselves: driving less would reduce demand and put downward pressure on prices.
“There has to be a time when people start to cut back, I just don’t know what the magic point is,” said Patrick De Haan, an analyst at GasBuddy’s petrol shopping app. “Will it be $ 5? Will it be $ 6 or $ 7? That’s the million-dollar question no one knows.”
HOW DO DRIVERS FACE?
On Saturday morning at a BP station in Brooklyn, New York, computer worker Nick Schaffzin blamed Putin for the $ 5.45 a gallon he was paying and said he would make sacrifices to pay the price.
“You just cut down on a few other things: vacations, discretionary things, things that are nice to have but you don’t need,” he said. “Gas you need.”
At the same station, George Chen said he will have to increase the prices he charges his customers for the production of films to cover the gas he burns while driving through New York City. He acknowledged that others are not so lucky.
“It will be painful for people who do not receive salary increases right away,” he said. “I can only imagine families who can’t afford it.”
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Julie Walker of Brooklyn, New York, contributed to this report.