Pump shock: Why gas prices are so high
Gas prices have more than doubled in two years, saddling millions of people who drive cars and trucks every day with enormous costs.
A rare combination of economic and geopolitical forces now manifest themselves at the gas pump. The economy’s rapid recovery from the pandemic created more demand for gasoline, pushing prices higher. Then, the invasion of Ukraine led to a global backlash against Russia, which produces more oil than all but two other countries. So prices went higher again.
$37.95 to fill up a 15-gallon car
$29.10 to fill up a 15-gallon car
$63.15 to fill up a 15-gallon car
June 13, 2022
$75.15 to fill up a 15-gallon car
Data from EIA and AAA
In February 2020, before the pandemic took hold in the United States, gas prices remained low: about $2.50 a gallon. Filling up a midsize sedan with gas cost around $38.
Then the pandemic hit. The world shut down. Oil prices fell sharply because there was little demand. Production also slowed. There was simply less need for gas because people weren’t going anywhere. It cost about $29 to fill up a car, but people weren’t filling up as often.
Americans hit the road again in 2021. Vaccines became widely available, which meant many felt comfortable traveling again, especially by car or van. More vehicles of all types took to the road. More planes took off. Demand for gas climbed, but supply couldn’t catch up. So gas prices rose. It cost $45 to fill up a car.
In early 2022, things seemed to stabilize. Prices went down a little. But then Russia invaded Ukraine in late February. Prices shot back up. A full tank of gas can now cost more than $70, $80 or $90, depending on your car and where you live.
Gas prices are highly sensitive, so even the smallest shift in supply or demand can change what you pay at the pump on a daily basis. Other factors, like how far you live from a refinery or your state’s gas taxes, also play a role. Alaska, for example, charges 8 cents per gallon in state taxes, while California commands more than six times that, at 51 cents per gallon. There are also more specific considerations: California, for example, requires its own costlier fuel blend, which drives up prices even more.
In late May, the average gallon of gas in the United States was $4.62. It was $4.24 in Texas, $4.46 in Virginia and $6.17 in California.
Even if the price of oil comes down, the disparity in gasoline prices will continue in different parts of the country. Prices can be particularly high in the summer, which is bad news for the millions of travelers hopping into their cars to go to the beach, visit grandma or even go to work.
In Washington and around the country, leaders are split over how to respond to the high prices. Some governors are calling for the suspension of gas taxes to temporarily lower fuel prices, though that will pull money away from road projects. The White House is releasing oil from the Strategic Petroleum Reserve and taking steps to ease some emissions rules over the summer to increase the availability of gas. Republicans have called for more domestic oil production as a way to decrease reliance on imports.
This series is an examination of some of the most prominent economic themes of the year, explaining to readers their origins and impact during this highly uncertain period. These topics affect the finances of all Americans, and understanding what is happening can make you better prepared for what happens next.