Last week, fuel costs soared to record levels as the Ukraine conflict heightened fears that the conflict might disrupt oil supplies from Russia. Russia is responsible for approximately 12% the global crude market.
According to AAA, gasoline prices averaged $4.27 per g on Friday. This is down from $4.33 on March 11. The previous record high was $4.10 set in 2008.
Patrick De Haan is the head of Petroleum Analysis at GasBuddy and expects that gas prices will continue to fall. However, motorists have not been affected by the rise in gas prices. In a tweet, he noted that the demand for gasoline in the U.S. is up 1.4% this week and at its highest level since mid-December.
Global supply and demand are directly tied to gas prices. According to Bloomberg, the international and U.S. crude benchmarks fell to $107.49 a barrel earlier in the week. This is despite the fact that it was $130 higher than last week, despite hopes that recent talks between Russian leaders and Ukrainians could result in a ceasefire.
Since two years ago, gas prices have been rising steadily. This is due to several factors . The most important thing is that demand for fuel has rebounded rapidly among drivers and businesses after the emergence of COVID-19 in March 2020. The average price of fuel was $2.82 a year after the crisis. This is a 45% increase from the pandemic low.
Gas had reached $3.40 by December 2021 due to a wider burst in inflation, which also caused an increase in the price of food, rent and other goods.
OPEC countries have also cut oil production. This has resulted in a reduction of supplies. After Russia’s attack in Ukraine, gas prices rose even more this year. The U.S. decided last week to prohibit Russian oil and gas imports.
According to the Energy Information Administration, the U.S. produces an average of 11.6million barrels per day. This is up from 11.3million barrels in 2020. The United States imports less that 10% of its oil from Russia.
Congress has proposed ways to lower gas prices. This includes temporarily waiving the federal 18-cent per gallon gas tax. President Biden issued an order to release 50 million barrels oil from the nation’s Strategic Petroleum Reserve. A growing number states are considering whether to temporarily eliminate local gas taxes.
Even though gas prices have increased, the 2008 record is still higher when inflation has been taken into account — at $5.24 in current dollars.
