Record high gas prices are the main cause of sweltering inflation during the busy summer months – and the factors behind the high cost show no sign of easing.
Crude oil prices, which have surged above $100 a barrel, now account for 60% of the price of a gallon of regular unleaded gasoline, according to April data from the Federal Energy Information Administration.
Crude oil costs soared as demand slackened from the COVID-19 pandemic and the global supply chain was disrupted by Russia’s invasion of Ukraine and subsequent Western-imposed sanctions.
Just a year ago, crude oil prices accounted for 52% of the cost of a gallon of gas — and just 25% of the cost during the April 2020 COVID lockdowns, the New York Times reported.
Refining costs accounted for another 17% of the price per gallon as of April this year, while 12% of the costs went to taxes and 11% to sales and marketing, EIA data showed.
The nationwide average cost of a gallon of regular unleaded gasoline is now well over $5. On Wednesday, the national average for regular lead-free lead hit $5.014, down slightly from the all-time high of $5.016 the day before, according to the AAA.
Crude oil prices have surged above $100 a barrel. NY Post
This chart shows the monthly average for regular gas since 1980. NY Post
Although the US produces most of the world’s oil, it is the second largest oil importer.
That’s more than $2 up from the $3,076 an average gallon cost this time last year — and more than 50 cents up from the $4.47 an average gallon cost a month ago , as shown by AAA data.
The national average for a gallon of diesel fuel also hit a new record of $5.78 on Wednesday, according to the AAA.
The dueling issues of runaway energy costs and unchecked inflation have left President Biden and congressional Democrats fearing a backlash from angry voters in November’s midterm elections.
The national average cost of a gallon of regular unleaded gasoline is over $5.00, according to Getty Images/Patrick T. Fallon
But despite the president’s call on Wednesday for Big Oil to increase production, there’s no evidence such an effort would cool prices at the pump.
Despite being the top oil producer, the US is also the world’s second-biggest oil importer — and according to the Times, many refineries that produce gasoline aren’t designed to process what’s produced on US soil.
The US peaked its refining capacity in April 2020 at almost 19 million barrels per day, before the impact of COVID and lockdowns caused demand to collapse. As a result, oil companies have cut staff and closed refineries.
Today, US refineries are at 94% capacity, but production in March was 17.9 barrels per day, below pre-pandemic levels, according to Reuters.
Oil companies are also believed to be reluctant to reopen closed refineries due to labor shortages as well as the long-term expectation that crude oil prices will fall due to increased supply.
With mail wires