Going from one high to another is usually a good thing – unless it’s fuel prices! You’re probably wondering how high gas prices will go and whether there’s any way to save on gas money. Here’s what to expect in the next few months.
You’d think that with the economy back on track, gas prices would also moderate to an affordable level. Instead, they just keep rising and rising and rising… and the average American has to bear the heat! Car owners are now panicking and wondering whether we’ll see a drop in prices any time soon.
Let’s see what the current situation is and what to expect in the coming months.
What is the average price of gas in the US?
According to the American Automobile Association (AAA), the current national average is $4.983 per gallon, slipping by a tiny amount from last week’s high of $5.010. However, it does not seem to be a sign of moderation, as gas prices in 20 states are still well above $5 per gallon. Current prices are a whopping 60% higher than a year ago ($3.070 per gallon)
Which states have the highest gas prices?
Currently, California has the highest retail price of gas, with a gallon costing $6.401. Other states with prices above the national average include Alaska ($5.609), Washington ($5.547), Nevada ($5.646), and Oregon ($5.541).
How high will gas prices go?
As though it isn’t enough to eat into the disposable income of regular Americans, high gas prices are apparently here to stay awhile. Energy analysts at JP Morgan predict that it will reach more than $6 per gallon by August, and only then start to moderate in some way.
So far, it hasn’t surpassed the previous inflation-adjusted high that was reached in 2008 – the price will need to cross $5.33 to record a new high.
Why are gas prices still rising?
1. High crude oil prices: Fallout of Russia-Ukraine war
When Russia – one of the biggest suppliers of crude oil to the international market – went under US sanctions, it led to a supply shock in international markets. The Energy Information Administration reports that the price of Brent Crude has risen to $120 per barrel, up from $95 per barrel in March. This price rise has had a knock-on effect on gas prices in the US.
2. Post-pandemic supply-demand mismatch
Domestic oil companies have not yet ramped up production to meet the increased demand in 2022. During the pandemic, many companies laid off workers and shut down oil wells, and they’ve been unable to re-start production easily. They’re also facing a labor shortage as they
3. Artificial high prices maintained by Big Oil
Oil companies have been trying to shore up profits to make up for the losses they suffered during the pandemic. Big Oil is also dragging its feet in order to artificially inflate prices and pass on the benefits to its shareholders as dividends or buybacks.
4. Supply chain and logistical issues with domestic production
Many domestic refineries are currently working at full capacity and yet aren’t able to keep up with the demand. The costs of laying pipelines and other infrastructure for drilling and transport of oil have also increased – so oil companies are balking at the idea of ramping up capacity.
When will gas prices go down?
Energy analysts at JP Morgan believe that there will not be moderation in gas prices unless there is a drastic change in any of the core factors given above. In fact, given that summer has started and more people are going to be traveling and taking road trips, gas prices will likely increase before they start going down. It is predicted that the average price across the country could cross $6/gallon by August.
Who controls gas prices?
To say that one person, one company or even a group of companies/countries control the price of gas is misleading. Gas prices in the US and across the world depend on complex issues ranging from:
- The amount of crude oil supply in the international market
- The aggregate demand in the global market
- The domestic production of oil in the US and other energy-rich companies
- The price of oil sold by energy cartels like the OPEC
- The cost of transporting oil across the world (supply chain and logistical issues)
- Prices fixed by big oil companies
- Taxes and other charges levied by federal/state governments
Also read: How a Domino Effect has led to high gas prices
Does the President control gas prices in the US?
Not by a long shot! The price of gas cannot be fixed by one person or company, just like the supply of gas isn’t a tap that can be opened and closed at will.
President Joe Biden recently wrote letters to the CEOs of Big Oil companies including Chevron, Exxon Mobil, Shell, and BP, squarely putting the blame for the steep rise in gas prices on Russian President Vladimir Putin. He also asked them to help moderate prices in the economy by increasing domestic production and refinery capacity, taking stock of their inventory, and putting forward solutions to bring prices back to stable levels.
However, much of it depends on the peaceful resolution of the Russia-Ukraine conflict and the unraveling of the global oil supply chain, which has been reeling from labor and transportation issues.
Can you get a stimulus check for gas in 2022?
Currently, the Gas Rebate Act of 2022 has been introduced in Congress. If passed, it will authorize gas stimulus checks/ energy rebates of $100 per month to eligible taxpayers. It will also offer a further $100 rebate per eligible dependent.
Married taxpayers who file their returns jointly and with incomes of up to $150,000 will receive the full rebate, as will single taxpayers earning up to $75,000. There will be phase-out levels for taxpayers with higher incomes.
How can you save at the gas station?
Given the volatility in gas prices, more than 56% of average Americans have started driving less. However, until the prices moderate, here are a few ways to keep track of your fuel consumption – and even save money.
- Sign up for cashback on gas with auto service apps like Way.com
- Use a mileage tracker to measure your car’s economy and tune it for better performance
- Follow common fuel efficiency guidelines like using cruise control while driving, regular performance checks, reducing idle time, and losing excess car weight
- Before filling up your tank, check for gas stations near you that offer the cheapest rates
- Try filling gas on Mondays (when average prices are lower) and avoid gas stations on Fridays (when prices are higher)
- Use alternative fuels or hybrid fuels like E15 and E85 gas
- Sign up for vehicle subscription plans like Way+ that help you save on car expenses
Frequently Asked Questions (FAQ)
Which US state has the cheapest gas?
Georgia has the cheapest gas prices in the US. A gallon of gas in Georgia costs $4.470 compared to the national average of $4.981.
Is gas $10 a gallon in California?
While the average California gas price is $6.40/gallon, a gas station in the Northern Californian town of Mendocino is charging $9.63 per gallon.
What’s the best day of the week to buy gas?
Monday is the best day of the week to buy gas because the start of the week has lesser volatility.
What’s the worst day of the week to buy gas?
The price of gas is generally higher on Thursdays and Fridays. Most commuters who refill on Mondays will have run out of fuel mid-week, leading to a surge in demand at gas stations. By Friday afternoon, folks will start to refill their tanks in anticipation of weekend travel, making the gas prices costlier.
Who has the highest gas prices in the world?
Hong Kong has the highest gas prices in the world, with the cost of a gallon reaching $11.35.
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