Another week, another record high for gas prices. And there seems to be no immediate relief in sight.
The average price for regular unleaded gas surged by a quarter in the past week to a record $4.86 on Monday, AAA said. That’s up 59 cents more than a month ago, and $1.81 more than a year ago.
“After a blistering week of gas prices jumping in nearly every town, city, state and area possible, more bad news is on the horizon,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “It now appears not if, but when, we’ll hit that psychologically critical $5 national average.”
Many states are above $5 per gallon. The top 10 states with the most expensive gas are: California ($6.34), Nevada ($5.49), Hawaii ($5.47), Oregon ($5.41), Washington ($5.40), Illinois ($5.40), Alaska ($5.37), Washington, D.C. ($5.06) and Michigan ($5.05).
Most people blame higher oil prices, but the real driver of higher prices may surprise you. It’s lack of refining capacity.
How much does oil affect gas prices?
About half the price of a gallon of gas comes from oil, and oil prices have lingered near the highest levels since 2008 partly because of short supply and soaring demand.
After getting burned in 2020 when economies around the world shut down and oil demand plunged, oil producers have been slow to ramp up production. The Organization of Petroleum Exporting Countries and its allies, collectively known as OPEC+, decided last week to slightly accelerate oil production. That may help cap oil prices, but it’s unlikely to move the needle on gas prices.
“Increasing crude oil supply does little to solve the global shortage of refining capacity,” Natasha Kaneva, JPMorgan head of global commodities, said.
What’s refining, and what has that got to do with the price of my gas?
Refining breaks down crude oil into products we use every day. On average, U.S. refineries produce, from a 42-gallon barrel of crude oil, 19 to 20 gallons of motor gasoline;…
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