US Government Takes Action to Reduce Gas Prices

Government Takes Action to Reduce Gas Prices
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According to AAA, the average price of a gallon of gas in the United States was $4.26 on Sunday, down around 7 cents from the previous weekend’s record high. California continues to lead the nation in gas prices with an average of $5.85 a gallon, with average gas prices in numerous counties exceeding $6.

Maryland and Georgia both passed bills on Friday that would temporarily suspend gas taxes in their respective states. Maryland’s bill will exclude consumers from paying taxes for 30 days, saving them around 36 cents per gallon. Georgia will hold off on raising gas taxes until the end of May, lowering costs by about 29 cents per gallon.

Legislators in California are likewise eager to help drivers who are paying $6 per gallon. Representatives presented a plan on Thursday to offer every Californian a $400 gas tax rebate. The $9 billion plan would be paid for with money from the state’s current budget surplus. On Monday, a competing plan to temporarily suspend the state’s 51-cent gas tax failed to pass.

Despite the fact that gas prices have remained stable recently, analysts predict that they will begin to rise again soon: “There are factors on the horizon that suggest gasoline prices will go up,” AAA spokesperson Robert Sinclair Jr. told Yahoo Finance. “Specifically, the summer gasoline blends.”

Gasoline is modified when the temperature rises in the summer to prevent excessive evaporation. It’s more difficult to refine and distribute these summer mixtures. This, combined with other continuing causes such as the crisis in Ukraine and rising demand as people return to work, drives up the price.

It’s having a knock-on effect on everything from freight expenses to Uber, which recently proposed a 45-to-55-cent premium in response to increased fuel costs.

Here’s all you need to know about fuel prices, including how high they could go, how the Ukraine situation and other factors are affecting them, and what the Biden administration is doing to address them.

How much higher will gas prices rise?

Prices at the gas station Tuesday’s average price per gallon was $4.316. That’s a penny less than Monday, but 81 cents more a gallon than a month ago and $1.45 more than this time last year. It costs roughly $65 to fill a normal 15-gallon petrol tank.

And that’s just the national average: gas costs $5.75 a gallon in California, and it’s more in at least 16 other states.

The next price point analysts are watching is $4.50 a gallon across the country, which “definitely could be a future possibility as long as there is tension between Russia and Ukraine,” according to Patrick de Haan, GasBuddy’s head of petroleum analysis.

Inflationary prices, according to De Haan, will continue for months.

As part of ongoing sanctions, President Biden announced an embargo on Russian oil imports. The United Kingdom has stated that it will begin “phasing out” Russian energy goods, with the exception of gasoline, while the European Commission has pledged to reduce Russian gas imports by two-thirds by 2022.

How much higher will gas prices rise?
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Brent oil is expected to average more than $100 a barrel for the rest of 2022, according to the US government’s Energy Information Administration. However, the organization cautioned that its projections might be drastically altered if more European countries impose sanctions on Russian petroleum.

According to Bjrnar Tonhaugen, Rystad Energy’s head of oil markets, if more European countries join the embargo, the oil may hit $240 a barrel by the summer.

“It would leave a 4.3 million barrels per day hole in the market that would be impossible to fill rapidly with other sources of supply,” Tonhaugen said.

According to NPR, even at $200 a barrel, economists expect gasoline costs to average $5.84 per gallon. According to Tonhaugen, oil at $240 would cause a global recession later this year. Demand would be forced down at that moment, he warned, and the price would plummet.

“The higher prices rise, the more likely the world economy will suffer a recession in the fourth quarter of 2022,” he warned.

What is behind the increase in gas prices?

The cost of crude oil, from which gas is refined, is closely related to the cost of gas. A $10 increase in the price of a barrel of petroleum adds about a quarter to the cost of a gallon of gasoline at the pump.

Gas prices have risen as a result of Russia’s invasion of Ukraine and consequent embargoes on Russian oil. Despite the fact that the United States does not buy much oil from Russia, the country accounts for 30% of Europe’s petroleum imports.

Oil is traded on a global scale, and any price fluctuations have an impact all over the world.

However, according to Troy Vincent of DTN, the situation in Ukraine is far from the only cause.

“For a long time, we’ve had a supply-and-demand imbalance,” Vincent explained. “And it will continue to exist regardless of whether or not this conflict is resolved,” he warned.

Inflation has been a problem for a while, and gas prices tend to rise in the spring as refineries convert to more expensive summer gas blends. The more expensive blend is currently available at gas stations on the West Coast, and it should be available countrywide by mid-April.

During the pandemic, demand for gas fell precipitously, prompting oil companies to halt production. OPEC nations, US corporations, and other oil producers are still wary of raising production, even when demand is approaching pre-pandemic levels.

“For a long time, we’ve had a supply-and-demand imbalance,” Vincent explained. “And it will continue to exist regardless of whether or not this conflict is resolved,” he warned.

The pandemic has also caused staffing challenges in refineries, as it has in other industries.

What is behind the increase in gas prices?
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“They can’t locate personnel, and they can’t find equipment,” Rapidan Energy Group president Robert McNally told CNN. “It’s not like they’re on sale for a lot of money. They simply aren’t available.”

A colder winter in North America has increased demand for heating oil, while pandemic-related online shopping has raised the cost of diesel, which powers all those vehicles. As a result, even before the Ukraine crisis, gas was expected to cost more than $4 per gallon.

According to Barron’s, Credit Suisse’s Manav Gupta noted in an analysis that “the underlying fact is that [the] market is well undersupplied in 2022.” “Even if global tensions reduce in the next weeks, high oil prices are here to stay in the short term.”

When will gas prices go down again?

Experts predict that gas prices will grow in fits and turns for the next six months, if not longer. When they will stop is highly dependent on how the situation in Ukraine develops.

In a video update earlier this month, GasBuddy’s de Haan said, “It’s impossible to make any certainties on where we’re headed, how high we’ll get, and when we’ll get there.”

“At this time, we really don’t know what will happen or what escalation could come next to send oil prices back up,” he said. “When do you think this will reach its apex?” Because the scenario is still evolving, these are extremely difficult questions to accurately address. We may believe that this week will be the pinnacle, yet something unexpected may occur the next week.

While Russia only supplies around 8% of US crude and petroleum, it provides roughly 30% of the European Union’s crude and over 40% of its gasoline. Experts claim that the price of gas in the United States is inextricably linked to global market conditions.

“It’s not practical, in my opinion, to block [the US] off and be energy independent and then say, ‘Sorry, folks, we’re independent and we don’t care about you,'” said energy analyst Rachel Ziemba.

In the midst of the Russian assault, President Biden has announced a strategy to “blunt gas costs.”

The US and other members of the International Energy Agency decided to release 60 million barrels of oil from strategic reserves, half of which will come from the US.

Biden has pushed for increased drilling and production in the United States: in 2021, Biden issued 25% more gas and oil drilling permits than President Donald Trump did in his first year in office. However, drilling a new well and bringing the oil and gas to market might take up to six months.

There’s also the option of obtaining energy from other sources: the US has been working to improve relations with Venezuela, which has been prohibited from selling oil to the US since 2018, as well as negotiating a new nuclear nonproliferation treaty with Iran, which would allow Iranian oil to return to the market.

What are some ways for consumers to save money at the gas station?

What are some ways for consumers to save money at the gas station?
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We can’t do much about the price of petrol, but drivers can reduce unnecessary journeys and shop around for the best deal, including crossing state lines if it’s not too bothersome.

Gas Guru is an app that searches for the cheapest gas rates in your area. Others, such as FuelLog, track your car’s gas mileage and can help you figure out if it’s getting good mileage. In addition, several gas station chains offer loyalty programs, and credit cards offer cash-back rewards for gas purchases.

Vincent of DTN cautions against hoarding gas or taking other drastic steps but instead recommends increasing gas budgeting. High energy prices, he noted, have been a key driver to inflation for a long time and aren’t going away anytime soon.

“When the price of crude rises, prices at the pump tend to rise in lockstep,” he remarked. “However, even when oil prices decline, gas prices tend to stay higher for longer.”

Also Read: Gas Prices are increasing continuously in the US: Here’s What You’ll Have to Pay at the Pump

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