It is clear every time you have to fill up your car’s gas tank-- gasoline prices are through the roof. In fact, on April 18, the highest national historical average price was surpassed as gasoline reached $4.17 per gallon. The previous record was $4.10, and it happened in 2008 just before the Great Recession and the housing crisis. Have we reached the peak of the high prices, or can more increases be expected?
The price of a gallon of gasoline is one of the main factors in the increase in inflation. In other words, if gasoline prices go up, other products are also expected to rise in price. This is because many businesses charge consumers based on transportation costs, and practically everything is delivered to our homes, stores, and supermarkets on trucks.
This sharp increase is unprecedented. During the first week of March, the national average saw its largest 7-day increase: 49.1 cents per gallon. By comparison, the last time there was a 49-cent weekly price increase was after Hurricane Katrina in 2005.
Why is gasoline so expensive?
Many factors influence the price of gasoline. According to the U.S. Energy Information Administration (EIA), as of January 2022, crude oil accounted for 56% of the average retail price of gasoline. Simply put, the biggest impact is the price of crude oil.
At the beginning of 2022, we began to see high prices for a barrel of oil, but a devastating blow occurred on February 24 with Russia’s invasion of Ukraine.
This conflict prompted Western countries to impose severe sanctions against Russia, which has slowed the flow of Russian crude oil exports to the world market and led to a shortage.
Will prices continue to rise?
The answer is yes. There are several reasons for this, one being that any armed conflict is inherently unstable. In fact, some experts think that Russian President Vladimir Putin underestimated this armed occupation and that it is expanding beyond what he had planned. It is a complex situation that probably will not improve in the short term, and it will continue to generate instability in the market.
We must add that we are moving away from the COVID-19 pandemic. Many companies will call their workers back to the offices, which means more cars on the roads and higher demand for fuel.
In addition, during the summer months there is typically an increase in gasoline prices due to higher consumption as more people travel to vacation destinations by plane or car. Moreover, people use the air conditioning in their vehicles more frequently.
“The high prices are likely to stick around for not days or weeks, like they did in 2008, but months,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
Is there anything we can do?
Families must take care of their resources, as being cautious is essential in uncertain economic times.
Avoid using your vehicle for non-essential trips. For example, instead of going to the grocery store every three days, make a list and go only once a week. Or if it is not too far, opt to ride your bicycle there.
Reach out to your neighbors and take turns carpooling, especially if you have children in your neighborhood who go to the same school or neighbors who work at the same place. According to data from the City of Charlotte, carpooling can save you up to $300 per month when it comes to the cost of fuel, parking, maintenance, etc. Carpooling also helps reduce emissions that are harmful to the environment.
AAA recommends maintaining your vehicle and removing excess weight in your vehicle.
Find this article in Spanish here: