The national average price for a gallon of gas has hit $5, the highest in twenty years. AAA released that data early this morning. The agency has been tracking gas price data since 2000, and AAA said that this price is the highest they’ve recorded since that time.
AAA also provided a dire warning when releasing those numbers; gas prices are only likely to get worse.
AAA spokesman Devin Gladden said “it’s likely to get worse as oil demand continues to outpace global oil supply, driving barrel prices even higher.” Other economic experts are saying that a $6 national gas price is not out of the question, particularly by Labor Day.
AAA’s data shows that the price of a gallon of fuel is 63 cents higher today than it was one month ago. It’s also up by almost $2 when compared to the same date last year.
Currently, the cost of a barrel of oil is the same price it was when Russian President Vladimir Putin invaded Ukraine – $120 per barrel. This price accounts for roughly one-half the price Americans pay for fuel. It’s important to remember that when Putin invaded Ukraine, shortly after, Americans saw a surge in prices that were only tapered somewhat when President Biden released a small amount of oil from the Strategic Reserve.
Since then, President Biden has attempted to get the Saudis and other members of OPEC to up their oil production (more oil on the market means more supply for a high demand). He’s also been discussing meeting with the leadership in Venezuela, but those talks have gone nowhere. Americans across the country – both Democrat and Republican – have begged the Biden Administration to consider easing regulations so that we could drill here on our own soil. So far, however, that plea has fallen on deaf ears.
Fox Business points out that there are multiple factors causing the price of oil and gas to be so high at the moment. While President Joe Biden is somewhat correct in saying that Putin’s invasion of Ukraine has increased gas prices (again, less oil on the market when demand is high means higher prices for that barrel of oil), the price of gas shot up significantly before the Russian – Ukrainian conflict. In fact, just after the 2020 election, gas prices began to rise, and they haven’t fallen since.
However, the sanctions that included refusing to purchase Russian oil did have an effect on the current price of gas. Plus, demand is up. It’s finally summer, and people are looking to travel after two summers effected by the pandemic and shut-downs. Travel is up across other transportation industries as well; currently, flights are being booked in record numbers, and expensive resorts are booked full.
Another factor that could be driving the current price of gas is one that isn’t quite Biden’s fault, either. Hurricane season began on June 1 and will run through November. With so many oil production rigs in the Gulf of Mexico, the idea that a hurricane could wipe out multiple rigs could drive the price of oil up for speculators. Making matters worse is that idea that storm forecasters are predicting a busy hurricane season. There have already been two named storms within the first two weeks of the month.
NOAA (the National Oceanic and Atmospheric Administration) is predicting between fourteen and twenty-two named storms during the 2022 hurricane season. To make matters worse for the oil industry in the Gulf, NOAA predicts between three and six powerful hurricanes.
AAA says that if the price of a barrel of oil reaches $140 to $150 per barrel, Americans will see “significant increases” in the price of fuel.
Ironically, Americans don’t appear to be slowing down when it comes to hitting the highway.
However, Americans are beginning to cut back in other ways. Americans are cutting back on eating out, and they’ve cut other discretionary spending.