Gas prices could reach record highs by this summer, analyst warns. ‘The news is grim’
As gas prices have continued to rise in the last year to heights not seen since 2014, there is fear the worst is yet to come.
The average price of gas in the United States, as of Feb. 10, is $3.47 — a staggering amount for many drivers and one that has not been seen for eight years, according to AAA.
Many factors, including high demand, slow production and global concerns in Russia have factored into the rising costs throughout the past year, experts say. As for if reprieve is near, “the news is grim,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
“Motorists should expect even more price increases, with the larger jumps coming later this spring as a confluence of seasonal factors and the potential flare up in geopolitical tensions,” De Haan said this week. “Ultimately, the national average could be pushed to record territory by the start of the summer driving season.”
Gas prices reached a record in July 2008 when Americans were paying an average of $4.11 per gallon. The current costs are more than a dollar more per gallon than this time last year, AAA data shows.
Oil recently rose in price due to concerns of Russia invading Ukraine, and there are worries there will not be enough supply to meet demand, De Haan said.
Russia is one of the biggest producers of oil in the world, accounting for more than one-tenth of the world’s oil in 2020, according to a BP analysis.
“This has not been demand-driven, but it has been supply-driven, and recently we’ve seen crude oil prices move on the basis of geopolitics,” Tom Kloza, global head of energy analysis for the Oil Price Information Service, told CBS MoneyWatch. “A lot of what-if scenarios: what if Russia does invade Ukraine and we have sanctions?”
There is worry Russia will withhold crude oil from the Western world if the country is sanctioned based on what happens with it and Ukraine, AAA reported.
“This shows how events on the other side of the globe can have a noticeable impact right here in the U.S,” AAA spokesperson Andrew Gross said. “And unfortunately for drivers, they are reminded of this by higher prices at the pump.”
More than half of the cost of gasoline is attributed to the price of crude oil, according to the U.S. Energy Department, Reuters reported. The remaining cost includes “refining, transportation and federal and state taxes,” CBS News reported.
Two Democratic U.S. senators, Maggie Hassan, of New Hampshire, and Mark Kelly, of Arizona, introduced a bill on Wednesday, Feb. 9, to suspend the 18.4 cent per gallon federal gas tax until January.
“We need to continue to think creatively about how we can find new ways to bring down costs, and this bill would do exactly that, making a tangible difference for workers and families,” Hassan stated.
On a federal level, President Joe Biden said last week his administration is “working to bring (gas prices) down.” He did not specify how he would do so, but presidents do not have the ability to control the cost of gas.
Last fall, the White House announced plans to release 50 million barrels of crude oil from the country’s petroleum reserve. White House press secretary Jen Psaki highlighted additional steps the White House is taking to help.
“With oil-producing countries, we’re talking about proposed production increases,” Psaki said this week during a news briefing. “With oil-consuming countries, we’re talking about releases from strategic reserves.”
But what the president can do, no matter the political party, is limited because of the cost of gas is tied to the price of oil, AAA’s Gross told CBS News.
This story was originally published February 10, 2022 at 8:58 AM with the headline "Gas prices could reach record highs by this summer, analyst warns. ‘The news is grim’."