BUCKHANNON — Gasoline prices have reached an all-time high over the past week. Analysts from Car and Driver report, “Geopolitical tensions, inflation and the COVID-19 pandemic have all contributed to the increasing price of gasoline.”
The current invasion of Ukraine by Russian President Vladimir Putin has in turn caused United States President Joe Biden to ban Russian oil imports, with Biden stating to Americans, “Defending freedom is going to cost.”
According to apnews.com, the action follows pleas by Ukrainian President Volodymyr Zelenskyy to U.S. and Western officials to cut off the imports, which had been a glaring omission in the massive sanctions put in place on Russia over the invasion. The idea is that in banning Russian oil, it will have an impact on Russia’s funds for the war.
Furthermore, apnews.com stated, “Unlike the U.S., which is a major oil and gas producer, Europe relies on imports for 90% of its gas and 97% of its oil products. Russia supplies 40% of Europe’s gas and a quarter of its oil. The U.S. does not import Russian natural gas. Though Russian oil makes up only a small part of U.S. imports, Biden has said he was reluctant to ban it, cutting into supplies here and pushing gasoline prices higher.”
Inflation has also attributed to the rising cost of gasoline in the United States. Data obtained from tradingeconomics.com showed that the annual inflation rate in the United States accelerated to 7.5%. Gas prices are impacted by the inflation rate, as well as supply and demand, the value of the United States dollar (oil contacts are all denominated in U.S. dollars) and commodities traders.
According to thebalance.com, oil costs account for 43% of the price of regular gasoline and the remaining 57% comes from distribution, marketing, refining and taxes. It is estimated that a $10 rise in oil prices per barrel equates to a $0.25 increase per gallon.
According to bloomberg.com, WTI Crude Oil is currently at $123 per barrel and Brent Crude is at $127 per barrel. With the ever-changing economy and inflation rates, it is likely that everything Americans use will be increasing to accommodate the increasing gas prices.
COVID-19 has had an impact on the cost of gasoline as well. According to the United States Bureau of Labor Statistics, the onset of the pandemic led to an initial drop in prices for petroleum-based products and then, just as abruptly, prices rose sharply as producers limited production and demand increased. It is noted that COVID-19 caused imbalances in supply and demand with gasoline and other commodities.
As reported by AAA, the highest ever recorded national average price per gallon of gasoline was $4.11 on Thursday, July 17, 2008. GasBuddy released a statement on Monday.
“Americans have never seen gasoline prices this high, nor have we seen the pace of increases so fast and furious. That combination makes this situation all the more remarkable and intense, with crippling sanctions on Russia curbing their flow of oil, leading to the massive spike in the price of all fuels: gasoline, diesel, jet fuel and more,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “It’s a dire situation and won’t improve any time soon. The high prices are likely to stick around for not days or weeks, like they did in 2008, but months. GasBuddy now expects the yearly national average to rise to its highest ever recorded.”
Additionally, GasBuddy’s 2022 Fuel Outlook predicts that the national average will reach a high of $4.25 per gallon by May but then will see a steady decrease with the national average declining to an estimated $3.78 per gallon by December.
Many of the larger chain stations are keeping with the trend of raising prices. Here in Buckhannon, many residents are choosing to support the smaller, privately owned stations whose prices have remained below the $4 margin.