Why Did Gas Prices Go Up

Gas prices have gone up again, and you’re probably wondering why? Well, there are several reasons that gas prices go up in the United States. The most common factor is the price of crude oil (the fuel) itself, which has been extremely volatile over the past few years due to instability in certain countries. Crude oil comprises about half of the average price of gasoline in the U.S., with taxes accounting for much of the other half. Fuel taxes fund highway maintenance and construction, among other things, but are fixed rates that generally don’t fluctuate with changes in crude oil prices.

It's summer

In the summer, people take more trips to the coast and enjoy barbecues outside with friends and family. Plus, it's vacation season! All of these things mean that gas consumption spikes during the warmer months. In order to account for this, oil prices have risen along with the price of gasoline because there is less supply at a time when demand for fuel is higher.

 Gas prices also vary by state. A report on gas prices conducted by WalletHub in June 2018 found that Connecticut has the highest gas prices and California has the lowest gas prices, while Mississippi is actually tied with South Carolina for having some of the cheapest gasoline in America.

 

Most states have regular fluctuations in their fuel costs throughout any given year. However, sometimes these price increases are temporary - they last a few weeks or a few months before they come back down again.

Hurricanes

There are several reasons why gas prices have been increasing recently. One reason is the recent hurricanes in the Gulf Coast, which have disrupted operations of major petroleum refineries. For a time after Hurricane Harvey hit Texas and before it reached Louisiana, major oil refineries in Corpus Christi, Galveston and Houston were shut down. Refineries also closed after Hurricane Irma swept through Florida last September.

 Another reason is because of Harvey and Irma, there has been an oversupply of crude oil on world markets. This has caused prices to drop, which means refineries are having trouble turning a profit. In order to make up for those losses, gas prices have increased in areas that had been getting cheaper fuel from Texas and Louisiana refineries.

 The final reason is because Hurricane Maria hit Puerto Rico, which was already in a difficult financial situation and relies heavily on imported fuel. The storm damaged much of its infrastructure and knocked out electricity to more than half of its 3.4 million citizens, who have been relying on generators for power ever since. This meant even less refined fuel made it to local gas stations than usual and prices spiked as a result.

China

The US is the third largest consumer of oil in the world, behind only China and India. In fact, America consumes 25% of all petroleum produced globally. This means that the price of crude oil is a major factor in what we pay at the pump here in America.

Gas prices may go up due to several factors: When crude oil prices go up, this causes gasoline prices to increase since gasoline is primarily refined from crude oil.

 Gas prices have gone up in recent years. What used to cost less than $3 a gallon four years ago now costs closer to $4 a gallon.

 Gas prices tend to rise and fall with oil prices, which are influenced by many factors, including supply and demand, but are ultimately dictated by global politics. OPEC is a major player in international oil markets as it controls about 70% of crude production.

Natural disasters

The rise in the price of gas may be attributed to the effects of a recent oil spill in Cajun region. The reason this spill has been so damaging is because it is an exploratory well, not yet connected to any pipeline. This caused a shortage of available oil and caused a quick hike in gas prices due to speculation. This unfortunate event can be a direct cause for the increase in gas prices as well as many other factors like greater global demand or panic-driven hoarding.

 In addition to these large-scale effects, small disruptions in supply can affect gas prices at home.  For example, hurricane Isaac disrupted production in parts of the Gulf Coast which reduced supplies. Low inventories led to shortages that pushed up prices by an average of 12 cents per gallon across the nation.

 OPEC which produces 40% of America’s oil supplies agreed to reduce output by 1.5 million barrels per day in hopes of improving global supply and reducing gas prices. This would theoretically lower gas prices, but because it doesn’t become official until January 1st 2013, it is too early to tell if it will have an effect. However, for now, high gas prices are expected to remain a problem for some time to come.

Summary

This week the price of gas has been higher than usual, so you may be wondering why. It's a bit complicated, but here are some things to consider. The price at the pump is typically set by an international trading market. Factors like production, demand and speculation can cause fluctuations in the price. Other factors that might affect gas prices include increased economic activity (like a new job) or road construction that leads to clogged traffic or gas shortages in other countries.