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Why Is Gas Going Down So Fast
The average regular price of gasoline in the U.S. as of March 14 is $3,412 a gallon, according to AAA, which tracks gasoline prices.
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AAA. Average national gas prices. Accessed March 14, 2024. See all sources. That’s about 2 cents more than last week’s average and the highest national average since November.
Today’s price represents a 16-cent jump from last month’s average of $3.256 a gallon, AAA data showed. Since the beginning of 2024, the national average has increased by 32 cents.
According to AAA data, a gallon of gas is 5 cents cheaper today than it was last year. However, prices remain relatively low compared to the 2022 and 2023 waves. Today’s price is about 32% cheaper than June 16, 2022, when the highest average price was recorded at a whopping $5,016, according to AAA.
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Oil prices have been on the rise lately, and that’s probably what’s pushing pump prices up, according to AAA. Oil prices have risen by about $10 per barrel in recent months.
Warmer weather also usually means more demand for gas, which can drive up prices. The seasonal shift toward rising prices begins around spring break in March and April, according to AAA. Expect gas prices to rise slowly until peaking in July.
Other unexpected factors can also contribute to the increase in the price of gasoline. For example, US refineries have been less active so far in 2024, according to the US Energy Information Administration. That’s in part because of a power outage at the BP-Whiting refinery in Indiana that shut down the facility. This refinery typically processes 435,000 barrels of oil per day.
Overall, gasoline prices are falling from mid-2022. That year, Russia’s invasion of Ukraine and inflationary pressures pushed the national average to more than $5 a gallon.
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Experts say gas prices will behave normally in 2023, according to USA Today. This year is expected to be similar, if not a little better.
Drivers in the states below are experiencing the highest average gas prices per gallon, according to AAA data as of 14.
According to AAA data, drivers in the following states are seeing the lowest average gas prices per gallon since March 14:
Gas prices are not controlled by any person. Instead, the price of gas is determined by a complex set of factors operating long before the gas reaches your local gas station. These factors, according to the US Department of Energy, include:
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According to the U.S. Energy Information Administration (EIA), the price of crude oil is typically more than half the price of a gallon of gasoline. A specific type of crude oil, West Texas Crude, is used as a benchmark for oil prices in North America.
The price of benchmark West Texas Intermediate crude fell from more than $115 a barrel in the summer of 2022 to about $79.72 today, according to the EIA.
Gasoline prices at the pump rarely reflect current market conditions; instead, they represent expenses incurred weeks, even months in advance. This lag causes prices to rise more slowly and fall more slowly than the news headlines suggest. And while lack of space, lack of refinery production, or blending problems can increase gasoline prices locally, large national changes in gasoline prices are almost always driven by the price of oil.
There are four types of fuel at the pump, which will vary in price. The three non-diesel types of gasoline—regular, medium, and premium—are categorized by octane number, which is a measure of the fuel’s stability (the pressure at which the fuel burns in the engine).
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Most of the gasoline sold in the United States is refined here. But to make gasoline, oil must be refined, and the oil used to make gas in the US is a mix of imported and domestic. The primary sources of oil imported into the United States are from Canada, Mexico, Saudi Arabia, and Colombia. Russia was on this list until March 2022, before the war in Ukraine.
Because the US can source some of its own oil, we tend to see lower costs at the pump than, say, European countries where most of their oil is imported. But because the oil used to make gasoline in the U.S. does not come entirely from the U.S., global conditions of production and trade can affect the price of fuel sold at your local gas station.
Crude oil must be refined to produce fuel that can be sold to consumers. This conversion is done in oil refineries. Refining costs vary throughout the year and vary by region. These costs also depend on the type of oil used; the ingredients are mixed into the fuel; composition that must be used in each region to meet air quality standards; and the processing technology used in each refinery.
Federal, state and local taxes also determine the retail price of gas. The federal gasoline tax is 18 cents per gallon of gasoline and 24 cents per gallon of diesel.
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States also have tax rates. Total state gas taxes and fees in 2022 averaged 31.02 cents per gallon, according to the U.S. Energy Information Administration, or EIA. The states with the highest fuel tax rates according to IGEN are:
The cost and profit of supplying fuel to consumers also affect the price of gas. After crude oil is refined into gasoline, the oil is sent through pipelines to terminals where it can be blended to meet local standards. From the terminals, it is delivered by tanker to retail gas stations, where you buy fuel. The costs of marketing and individual retailers – chains or independent stations – will be further passed on to the consumer. Rent, mode of transportation, wages, equipment, insurance, local taxes and operating fees are also factors that will affect the price retailers charge for gas.
Fuel prices in California are so high for several reasons, including state environmental regulations, taxes and California’s unique ability to refine its own gasoline.
Did you know that gasoline sold in California is different from gasoline sold elsewhere in the United States? Since 1990, California has mandated that any gasoline sold in the Golden State be produced under strict guidelines that reduce overall gasoline emissions. As you might expect, California’s cleaner fuel mix is more expensive than the gasoline the rest of the country uses.
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Because of these regulations, more than 90% of the gasoline used in California is refined in the state, according to the California Energy Commission. So if any of the state’s refineries experience unplanned outages or outages, those gasoline prices go even higher because the state can’t increase gasoline supplies by importing dirtier fuel that isn’t refined according to its regulations.
Also, gasoline prices are high in California because the state just refines less gasoline. By the end of 2022, California mandated that all cars, trucks and SUVs sold in the state be zero-emission vehicles by 2035. public policy think tank at Stanford University.
Finally, taxes contribute to sky-high gas prices in the state. California drivers pay about $1.19 per gallon in taxes and fees, according to a 2021 study by Stillwater Associates, a transportation consulting firm.
The president does not set the gas prices you pay at the pump. When prices go up, don’t blame the president. Conversely, when prices drop, don’t thank the president.
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The White House is often responsible for gas prices, but the administration rarely has effective tools to move the needle one way or the other. The supply and demand for oil is to blame.
A war between Israel and Hamas has the potential to increase oil prices, which would affect the price at the pump.
Neither Israel nor Gaza produce much oil, so the immediate impact of the conflict on oil and gas prices has been limited. However, according to the Associated Press, the war motivated another group to attack commercial ships in the Red Sea. Attacks by the Yemeni Houthis have been disrupting trade on an important route since November.
Carriers needed longer and more expensive routes to avoid the region, according to AAA. It increases the cost of moving goods. Oil prices have fluctuated during the attacks, sometimes rising as tensions rise in the region.
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As the war continues, the direct involvement of other countries, such as Iran, could increase
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