Since the Russian attack of Ukraine began on February 24, gas prices have risen to their highest level in more than a decade. It sends global markets into a tailspin because Russia is one of its largest oil producers. The average price of regular gas touched $4.33 per gallon on Monday, and the prices continue to be historically high.
Before last week, the highest gasoline price was $4.11 per gallon, set in 2008. Obviously, surging prices have a substantial impact on household budgets. It is fair to expect a typical family’s budget to rise by $2,000 due to the higher prices. The average gas prices have recently dropped from $4.33 per gallon to $4.289!
But, the minor dip in prices will help us? Why are gas prices surging? When will gas prices go down noticeably? Here’s more info on the soaring gas prices!
Why are gas prices so high?
According to industry experts, there are chances that the national average price for a gallon of gas will likely drop in the coming weeks. However, some states like California will still suffer from high gas prices due to supply issues. Presently, the state’s average price for a gallon of gas is $5.785, almost $1.50 higher than the national average. So, when will gas prices go down? Before that, you must know the main reasons behind the surge in gas prices!
Demand for gas after the pandemic
The gasoline demand crashed as people sought refuge at home due to nationwide lockdowns when the pandemic hit the US in March 2020. An average driver reduced their driving time in half. Due to the sharp decline in demand, gas prices fell to an average of $1.94 per gallon in April 2020. But people resumed driving as vaccines became available and the economy improved, resulting in the rise of gas prices. By March 2021, the average gas price per gallon surged to $2.82, recording a 45 percent increase from the pandemic period.
Oil production reductions
OPEC and oil-producing countries like Russia cut their production by 10 million barrels when the demand for gas and oil fell during the pandemic. It is equal to 10 percent of the global supply. Though the global economy recovered from the pandemic, OPEC was slow to ramp up production. So even after the gas consumption reached pre-pandemic levels, the production was lagging significantly. OPEC didn’t accelerate the production till July 2021.
Sanctions imposed by the US on Russia impact the global market
As the prices kept on increasing, Russia’s invasion of Ukraine resulted in a 20 percent or more surge in oil and gas prices in just a few weeks. On March 8, President Joe Biden declared a ban on Russian oil and gas imports. It was to target Russia’s primary revenue source during the war. However, the US only imports less than 10 percent of its gas and oil from Russia. Though the US doesn’t depend much on Russia for fuel, what made the prices surge so heavily? It is because of the larger global oil market.
When will gas prices go down?
Though there happened a slight dip in prices recently, people are still apprehensive about will gas prices go down. However, experts say that you have to expect high gas prices for weeks, if not months. Experts also expect that the average gas price per gallon may exceed $5 across many parts of the country in the next six months. It will surely be troubling low-income families and rural residents who may have to cut back on spending.
It will be fair to expect $5-6 per gallon throughout the summer, with diesel prices even higher. If high prices continue, it could significantly impact the US economy. It will result in lower consumer demand for various products as people limit their spending to balance the higher cost of daily commutes.
What are the average gas prices by year?
In 2020, the average gas price was around $2.242 per gallon, and it increased to $3.133 per gallon in 2021, recording a surge of 39.7 percent. The average gas prices by month have increased since the beginning of 2022. The average price per gallon was around $3.50 in January, and it surged to $3.675 in February. At the same time, the average price per gallon stands at $4.289 this month.
Here’s more info on increasing gas prices!
When will gas prices go down: Some quick info
- The average price per gallon is nearly $4.289 in the country.
- Experts believe that the average price per gallon will exceed $5 in six months.
- When the price exceed $5 per gallon, the economy will suffer from demand destruction. Consumers and businesses cut spending as a result of the higher prices.