Rising gas prices have politicians across the country proposing tax relief measures.
Justin Sullivan/Getty ImagesGas prices in the US continue to drop slowly from last week's record highs -- the average price of a gallon of gas Sunday was $4.26, down about 7 cents from last weekend, per AAA. California continues to lead the nation at a whopping $5.85 per gallon, with average gas prices in several counties jumping above the $6 mark.
On Friday, both Maryland and Georgia passed legislation that would temporarily suspend gas taxes in their states. Maryland's law will stop taxes for 30 days and save consumers about 36 cents per gallon. Georgia will pause gas taxes until the end of May, cutting prices by roughly 29 cents a gallon.
California legislators are also anxious to provide relief to drivers facing $6 prices. On Thursday, representatives announced a plan to give every Californian $400 in the form of a gas tax rebate. The $9 billion proposal would be funded by the state's current budget surplus. A competing proposal to suspend the state's 51-cent gas tax for six months failed to pass on Monday.
Although gas prices have stalled lately, analysts say US drivers should expect them to start rising again soon: "There are things on the horizon that mean gasoline prices going higher," AAA spokesperson Robert Sinclair Jr. told Yahoo Finance. "Namely the summer blends of gasoline."
When the temperature rises in the summer, gasoline is reformulated to prevent excessive evaporation. These summer blends are more difficult to refine and distribute. That pushes the price up, along with other ongoing factors -- like the war in Ukraine, increased demand as people return to the office.
Combined, it's having a trickle-down effect on everything from trucking costs to Uber, which announced a 45-to-55-cent surcharge in light of rising fuel costs.
Here's what you need to know about gasoline prices, including how high they could go, how the Ukraine crisis and other factors are affecting them, and what the Biden administration is doing about it.
For more, learn how to save money on gasoline and how the US sanctions against Russia will affect gas prices.
How high will gas prices go?
Prices at the pump Tuesday averaged $4.316 a gallon. That's about nine-tenths of a penny less than Monday, but about 81 cents a gallon more than a month ago, and $1.45 more than this time last year. To fill up a typical 15-gallon gas tank costs about $65.
And that's just the national average: In California, gas is $5.75 a gallon, and it's above the national average in at least another 16 states.
The next threshold analysts are keeping an eye out for is $4.50 a gallon nationwide, which "certainly could be a future possibility as long as there is conflict between Russia and Ukraine," Patrick de Haan, GasBuddy head of petroleum analysis, said in a statement.
De Haan predicts inflated prices will be here for months to come.
President Biden announced a ban on Russian oil imports as part of ongoing sanctions. The UK said it'll begin "phasing out" Russian energy products, excluding gasoline, and the European Commission has committed to slashing gas imports from Russia by two-thirds in 2022.
The US government's Energy Information Administration now predicts Brent oil will average over $100 a barrel for the remainder of 2022. But, the agency added, its forecasts could change greatly if additional European countries sanction Russian oil.
Bjørnar Tonhaugen, head of oil markets for Rystad Energy, says that if enough European countries join the embargo, oil could hit $240 a barrel by the summer.
"It would create a 4.3 million barrels-per-day hole in the market that simply cannot be quickly replaced by other sources of supply," Tonhaugen noted.
Even at $200 a barrel, experts see gasoline prices averaging $5.84 per gallon, according to NPR. Oil at $240 would trigger a global recession later this year, Tonhaugen said. At that point demand would be forced down, he added, and the price would fall steeply.
"The higher prices go, the larger the chances of the global economy entering a recession already in the fourth quarter of 2022," he said.
What's making gas prices rise?
The price of gas is inextricably linked to the cost of crude oil, which it's refined from. Every $10 increase in the cost of a barrel of crude adds almost a quarter to the price of a gallon at the pump.
Russia's invasion of Ukraine, and subsequent embargos on Russian oil, have helped to drive gas prices up. Even though the US doesn't import much oil from Russia, 30% of Europe's petroleum imports come from there.
Oil is traded on a global market and any ripple affects prices all over the world.
Decreased demand for gas during the pandemic led oil companies to put the brakes on production.
Getty ImagesBut DTN's Troy Vincent says the situation in Ukraine is hardly the sole factor.
"We've had a supply-and-demand imbalance for a while," Vincent said. "And it will remain, regardless of whether this conflict goes away," he said.
Inflation has been an issue for some time, and the cost of gas tends to rise in spring, as refineries switch over to more expensive summer gas blends. The pricier mix is already at the pumps on the West Coast and should be nationwide by mid-April.
Demand for gas plummeted during the pandemic, causing oil producers to pump the brakes on production. Even though demand is nearing pre-pandemic levels, OPEC nations, US companies and other oil producers are still gun-shy about increasing production.
"We've had a supply-and-demand imbalance for a while," Vincent said. "And it will remain, regardless of whether this conflict goes away," he said.
And as it has in every industry, the pandemic has led to staffing issues at refineries, as well.
"They can't find people, and can't find equipment," Robert McNally, president of consulting firm Rapidan Energy Group, told CNN. "It's not like they're available at a premium price. They're just not available."
A colder winter across North America also led to higher demand for heating oil, and pandemic-driven online shopping has taxed diesel, which fuels all those trucks. As a result, gas was predicted to surpass $4 a gallon even before the Ukraine crisis.
"The fundamental fact is that [the] market is well undersupplied in 2022," Credit Suisse's Manav Gupta wrote in an analysis, according to Barron's. "Even if geopolitical tensions ease over the next few weeks, near-term high oil prices are here to stay."
When will gas prices go down again?
Gas prices will likely continue to rise in fits and starts for the next few months, if not longer, experts say. When they stop depends greatly on how the situation in Ukraine unfolds.
"It's hard to give any assurances on where we're going, how high we'll get and when we'll get there," GasBuddy's de Haan said in a video update earlier this month.
"We really don't know at this point what will happen and what escalation could happen next to drive oil prices up again," he said. "And when could this peak? Again, these are really tough questions to accurately answer because the situation is unfolding. We could think that this week will peak, and then next week there could be something else that completely changes the situation."
While only about 8% of US crude and petroleum comes from Russia, the country provides roughly 30% of the European Union's crude and almost 40% of its gasoline. The price of gas in the US can't be disentangled from what's happening to global markets, , experts say.
"It's not really realistic, in my mind, to close [the US] off and be energy independent and say, 'Sorry, guys, we're independent and we don't care about you,'" energy analyst Rachel Ziemba told CNN.
US President Joe Biden is releasing barrels from the Strategic Petroleum Reserve to offset rising gas demand.
Brendan Smialowski/Getty ImagesPresident Biden has promised a strategy to "blunt gas prices" in the face of the Russian incursion.
The United States and other members of the International Energy Agency agreed to release 60 million barrels of oil from their strategic reserves, with half coming from the US.
Biden has encouraged US companies to increase drilling and production: In 2021 alone, Biden approved 25% more gas and oil drilling permits than President Donald Trump did in his first year in office. But It can take six months to complete a new well and bring the oil and gas to market.
There's also the option of getting energy products from other sources: The US has been working at improving relations with Venezuela, which has been banned from selling oil to the US since 2018, and negotiating another nuclear nonproliferation treaty with Iran, which would bring Iranian oil back onto the market.
How can consumers save at the gas station?
There's not much we can do to change the price of gas, but drivers can cut down on unessential trips and shop around for the best price, even crossing state lines if it's not inconvenient.
Apps like Gas Guru scan for the best gas prices in your region. Others, like FuelLog, track your car's gas mileage and can help determine if it's getting decent fuel economy. In addition, many gas station chains have loyalty programs, and credit cards have rewards programs that give cash back for gas purchases.
DTN's Vincent advises against hoarding gas or other extreme measures but encourages budgeting more for gas. High energy prices have been a major contributor to inflation for a while, he said, and won't be going away immediately.
"When the cost of crude rises, prices at the pump tend to reflect it very quickly," he said. "But gas prices tend to linger higher longer even when crude falls."
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