BUCKHANNON — Gas prices have been on a continual rise and recently reached record highs among the mountain state and as a nation. Many investors and analysts report and concur that relief may arise in the fall of 2022.
According to from GasBuddy, the national average as of Friday, June 10 was $5.007/gallon while the average in W.Va. was $4.906/gallon. This leaves everyone to wonder, why are gas prices so high? The American Petroleum Institute (API) said, “petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.”
“Oil prices are at a seven-year high amid a persistent global supply crunch, workforce constraints, increasing geopolitical instability in Eastern Europe, the economic rebound following the initial stages of the pandemic and policy uncertainty from Washington,” as stated by API.
API pointed out four other key factors as to why gas prices are so high and continue to increase. First, “Policy choices matter. American producers are working to meet rising energy demand as supply continues to lag, but policy and legal uncertainty is complicating market challenges,” said API. Second, API stated, “The administration needs an energy-policy reset, and Europe is a cautionary tale. We need not look further than the situation in Europe to see what happens when nations depend on energy production from foreign sources that have agendas of their own. There are more policymakers could do to ensure access to affordable, reliable energy, starting with incentivizing U.S. production and energy infrastructure and sending a clear message that America is open for energy investment.” Third API stated, “repeated in-depth investigations by the Federal Trade Commission (FTC) have shown that changes in gasoline prices are based on market factors and not due to illegal behavior, and the American people are looking for solutions, not finger pointing. The price at the pump that Americans are currently paying is a function of increased demand and lagging supply combined with the geopolitical turmoil resulting from Russia’s aggression in Ukraine.” Fourth, “lawmakers should focus on policies that increase U.S. supply to help mitigate the situation rather than political grandstanding that does nothing but discourage investment at a time when it’s needed the most.”, stated API.
Additional information obtained from API revealed that taxes contribute to the cost of gasoline. API revealed the following data, “Federal, state, and local government taxes also contribute to the retail price of gasoline. The federal excise tax is 18.40¢ per gallon (cpg), and state gasoline fees and taxes range from a low of about 15 cpg in Alaska to as much as 68 cpg in California and around 59 cpg in Illinois and Pennsylvania. On average, state taxes and fees average about 39 cpg and when combined with federal taxes average 57 cpg at the pump. Sales taxes along with taxes applied by local and municipal governments also can add to gasoline prices in some locations.”
Now, some data reveled when we may start to see the number go down at the pump and feel relief in our pocketbooks. The United States Energy Information Administration revealed in data from 2019 that “As of August 26, U.S. gasoline prices are 14 cents/gal lower than the average of the week before Labor Day for the past five years.” So many analysts and financial professionals including Kiplinger.com’s Jim Patterson concur that relief may be seen near Labor Day. “A good bet for when gas prices will go down is the fall, if seasonal patterns hold up this year. Before COVID-19 scrambled those patterns, gas prices would typically rise in spring, peak sometime around Memorial Day, ease a bit but stay high during the summer, then pull back sometime after Labor Day.”, said Patterson on Monday, May 9.
With relief possibly months away, API recommended the following to increase/improve fuel economy. “Accelerate smoothly. Jackrabbit starts consuming twice the fuel as gradual starts. Also, pace your driving. Staying at a constant speed is better than continuously speeding up and slowing down. Slow down. The faster you drive, the more gasoline your car uses. Driving at 65 miles per hour instead of 55 miles per hour reduces fuel economy by about two miles per gallon.
Besides changing driving habits, it is important to maintain your vehicle. Have your car tuned regularly, keep air filters clean, and make sure the tires are properly inflated. An engine tune-up can improve car fuel economy by an average of one mile per gallon; under-inflated tires can reduce it by that amount. Don’t warm up your car for too long on cold mornings. Experts say that your car only needs a 30 second warm-up before you can start driving in winter. Cool your car responsibly on hot days. Less use of your air conditioner can improve fuel economy by as much as two miles per gallon, but today’s air conditioners create less drag on your engine than driving with the windows down. Also, you should clean out your car—not only will it make it look nicer but reducing weight can increase fuel efficiency.”