According to the U.S. Department of Energy (DOE), most (54 percent) of the you cost of gas at your local gas station can be attributed to crude oil prices.
Economic Growth
The U.S. Energy Information Administration (EIA) lists economic growth as one of the main factors impacting crude oil supplies (and prices). As economies grow, they require increased transportation, which in turn requires more fuel and higher demand for oil.
For example, the U.S. is one of the largest economies in the world. Despite being the world's biggest producer of oil, it is still a net importer of oil. Put simply, it takes a lot of fuel to run a big economy, and as countries race to increase their GDP, demand increases and gas prices rise for everyone.
OPEC
One international group that tends to have a major impact on crude oil prices is the Organization of the Petroleum Exporting Countries (OPEC). OPEC's 12 member countries include some of the world's largest oil reserves.
Together, Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates and Venezuela control about 72 percent of the world's oil reserves, per EIA.
OPEC sets oil production targets for its member countries, and if the targets are low, that can lead to higher oil prices worldwide.
Geopolitical Events
Geopolitical conflict and political changes can have a major impact on gasoline prices.
For example, when Russia invaded Ukraine in 2022, the European Union (EU) and the Group of Seven (G7, which includes the United States) imposed sanctions on Russia, including restricting the country's oil refining capabilities. Following these sanctions, U.S. gas prices hit a record high, according to NPR.
Extreme Weather
According to the DOE, most of the refineries in the U.S. are located along the Gulf Coast. This region is especially vulnerable to hurricanes. Hurricanes on the Gulf Coast can delay refining, which leads to higher gas prices.
Extreme weather in other parts of the country can also cause high gas prices. For example, snow can increase demand as more people heat their homes; meanwhile, snow can cause road closures and oil transportation delays.
FAQs
The price of crude oil is responsible for about half the cost of gasoline at the pump, and that makes sense because you really can't have gas without it. So as crude oil prices soar, so do gasoline prices. The greater the demand, such as in higher driving windows like summer, the higher the cost.
What is the reason for gas prices being so high? ›
Elevated oil prices are the main culprit, but seasonal factors and state taxes play a role, as well. Elevated oil prices: The cost of oil typically represents more than half of the cost of a gallon of gasoline, according to data from the U.S. Energy Information Administration (EIA).
What time of year are gas prices highest? ›
Traditionally, gasoline prices are at their lowest during the first week of February and then begin to climb, often peaking right before Memorial Day.
Why are gas prices higher in summer? ›
Each spring, gas stations shift from selling winter-grade fuel to summer-grade fuel, and this is what sparks the hike in price, as summer-grade fuel is more expensive to produce. This shift is known as the seasonal gasoline transition, and it does have a very important purpose.
Is summer or winter gas more expensive? ›
Gas prices tend to be lower in winter, but the reason why evaporates when warmer weather arrives. Every spring, news reports announce gas refineries are down for maintenance while transitioning from winter-blend to summer-blend gasoline, and soon after prices at the pump go up several cents a gallon.
Who determines the price of gasoline? ›
Gasoline prices are determined largely by the laws of supply and demand. Gasoline prices cover the cost of acquiring and refining crude oil as well as distributing and marketing the gasoline, in addition to state and federal taxes. Gas prices also respond to geopolitical events that impact the oil market.
Who controls the gas prices in the United States? ›
Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.
What year had the worst gas prices? ›
U.S. gasoline prices peaked at 3.62 U.S. dollars per gallon in 2012. Although U.S. gasoline prices dipped in 2013, they remained well above the three-dollar mark throughout 2014.
What day of the week is gas cheapest? ›
Buy Gas on Monday or Tuesday
Be strategic about the days you fill up at the pump. “For gas, Mondays and Tuesdays tend to be the cheapest days to fill up your tank as demand is lower at the beginning of the week,” Anderson said.
What state has the most expensive gas? ›
California has the highest price of gas, with an average of $4.78 per gallon of regular gas. Table with 4 columns and 5 rows. Per gallon of regular gas. Prices are updated daily.
Consistently high bills, or high bills in the summer when heating costs drop for most households, can often be attributed to high gas supply rates, older, inefficient appliances, a need to better maintain or service your gas appliances, window and door drafts, heat loss through the attic or chimney, or opportunities to ...
How high will gas prices get in 2024? ›
U.S. Regional Gasoline Prices as of July 23, 2024
Prices on the west coast continue to slowly move to the $4 line. The national average price of gasoline is down ever so slightly, at $3.47 per gallon, according to EIA data. The 2-cent drop on the national average comes despite one region seeing a 5-cent increase.
What's the difference between summer and winter gasoline? ›
A primary difference between winter- and summer-blend gas is their Reid Vapor Pressure (RVP). RVP is a measure of how easily the fuel evaporates at increased temperatures. The higher the fuel's RVP, the more easily it evaporates. Winter-blend fuel requires increased RVP.
What month is gas the most expensive? ›
Unfortunately for drivers, we often see the highest gas prices during the summer, starting around Memorial Day. In May 2022, U.S. consumers paid an average of $1.50 per gallon more than they were at the same time in 2021, according to AAA.
Why is US gas so expensive? ›
Underlying the higher costs of gas are routine factors including refinery maintenance, the switch to summer gasoline and rising demand. Domestic supply is also impacted as refineries take advantage of milder weather conditions to do necessary maintenance.
Why is summer gas more? ›
And just like a good Canadian whisky, the secret is all in the blend. Winter gas contains butane, a relatively cheap additive that helps cars start faster and run better in colder weather. In the summer, butane is left out in favour of alkylates, which burn cleaner but are more expensive to produce.
What is causing oil prices to rise? ›
Like most commodities, the fundamental driver of oil's price is supply and demand in the market. The cost of extracting and producing oil is also an important factor. Oil markets are composed of speculators who are betting on price moves, and hedgers who are limiting risk in the production or consumption of oil.
How does inflation affect gas prices? ›
higher inflation tends to lead to higher oil prices. In the longer term, if the Federal Reserve raises interest rates and slows economic growth to control inflation, oil prices could decline as a result.
Where are oil prices headed? ›
predicts that oil prices will remain between $75 and $85 per barrel for the second half of 2024, in line with current market trends. Brent crude is…
How much oil could the US produce? ›
The crude oil production record in the United States in 2023 is unlikely to be broken in any other country in the near term because no other country has reached production capacity of 13.0 million b/d.
