Gas Prices: States Act to Reduce Costs at the Pump! March 2022!

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Gas prices in the United States have continued to gently decline from last week’s record highs – the average price of a gallon of gas on Sunday was $4.26, down around 7 cents from last weekend, according to AAA. California continues to lead the nation with an average gas price of $5.85 a gallon, with prices in several counties exceeding the $6 mark.

Maryland and Georgia both passed bills on Friday that would temporarily suspend their states’ gas taxes. Maryland’s legislation suspends taxes for 30 days, saving customers around 36 cents per gallon. Georgia will suspend gasoline taxes until the end of May, effectively lowering prices by around 29 cents per gallon.

California senators are likewise eager to provide relief to motorists who are already paying $6 per gallon. Reps proposed a plan Thursday to offer every Californian $400 in the form of a gas tax rebate. The $9 billion proposal would be financed entirely from the state’s current fiscal surplus. On Monday, a competing plan to suspend the state’s 51-cent gas tax for six months was defeated.

Although gasoline prices have remained stable recently, analysts predict they will begin to rise again soon: “There are things on the horizon that indicate fuel prices will increase,” AAA spokesperson Robert Sinclair Jr. told Yahoo Finance. “Specifically, the summer gasoline blends.”

Gas Tax Inflation

 

Summer temperatures cause gasoline to be modified to avoid excessive evaporation. These summer blends present a greater challenge in terms of refinement and distribution. This increases the price, as do other ongoing variables – such as the crisis in Ukraine and rising demand when people return to work.

When taken together, it has a trickle-down impact on everything from freight expenses to Uber, which recently imposed a 45- to 55-cent premium in response to increased gasoline costs.

Here’s all you need to know about fuel prices, including how high they could go, how the Ukraine situation and other factors are affecting them, and what the Biden administration is doing to address them.

How much higher will gasoline prices rise?

Pump prices Tuesday’s average price was $4.316 per gallon. This is approximately nine-tenths of a penny less than Monday, but approximately 81 cents more per gallon than a month ago and $1.45 more than this time last year. A normal 15-gallon petrol tank costs approximately $65.

And that’s just the national average: gas costs $5.75 a gallon in California, and it’s higher in at least another 16 states.

The next price point analysts are watching is $4.50 per gallon countrywide, which “definitely might be a future possibility” as long as Russia and Ukraine remain at odds, according to Patrick de Haan, GasBuddy’s head of petroleum analysis.

As part of ongoing sanctions, President Biden announced an embargo on Russian oil imports. The UK announced that it will begin “phasing out” Russian energy goods, barring gasoline, while the European Commission pledged to halving Russian gas imports by 2022.

The Energy Information Administration of the United States currently forecasts that Brent oil will average more than $100 a barrel for the remainder of 2022. However, the agency cautioned that its projections may be significantly altered if additional European countries penalise Russian oil.

Bjrnar Tonhaugen, Rystad Energy’s head of oil markets, believes that if more European countries join the embargo, oil may reach $240 per barrel by summer.

“It would create a 4.3 million barrels per day supply gap in the market that cannot be rapidly filled by alternative sources of supply,” Tonhaugen explained.

According to NPR, even at $200 a barrel, experts predict gasoline costs will average $5.84 per gallon. A price of $240 a barrel of oil would trigger a global recession later this year, Tonhaugen predicted. At that moment, he added, demand would be squeezed and the price would decrease precipitously.

“As prices rise, the likelihood of the global economy entering a recession in the fourth quarter of 2022 increases,” he warned.

What is behind the increase in gasoline prices?

Gas prices are directly tied to the price of crude oil from which it is processed. Each $10 increase in the price of a barrel of crude oil results in a nearly 1/4 increase in the price of a gallon of gasoline at the pump.

 

gas inflation and stimulus

 

Russia’s invasion of Ukraine and related oil embargoes have contributed to the increase in gas prices. While the US buys very little oil from Russia, the country accounts for 30% of Europe’s petroleum imports.

Oil is traded on a worldwide market, and any price movement has an effect on prices throughout the world.

Prohibition of pipeline gas

Reduced demand for gas caused oil companies to halt production during the pandemic.

However, Troy Vincent of DTN points out that the crisis in Ukraine is far from the only cause.

“For a long time, we’ve had a supply-and-demand imbalance,” Vincent explained. “And it will continue to exist regardless of whether this disagreement is resolved,” he added.

For some time, inflation has been a concern, and the cost of petrol often increases in the spring when refineries convert to more expensive summer gas blends. The more expensive blend is now available on the West Coast and should be available countrywide by mid-April.

Demand for gas fell precipitously during the pandemic, forcing oil producers to temporarily halt production. Despite the fact that demand has returned to pre-pandemic levels, OPEC nations, US corporations, and other oil producers remain wary of boosting supply.

“For a long time, we’ve had a supply-and-demand imbalance,” Vincent explained. “And it will continue to exist regardless of whether this disagreement is resolved,” he added.

Additionally, as has been the case in every business, the epidemic has created personnel challenges at refineries.

“They can’t find people or equipment,” Rapidan Energy Group president Robert McNally told CNN. “It’s not as if they’re expensive. They are simply unavailable.”

A colder winter across North America also increased demand for heating oil, while pandemic-related online shopping has increased the price of diesel, the fuel used to power all those vehicles. As a result, even prior to the Ukraine conflict, gas prices were anticipated to exceed $4 per gallon.

“The fundamental fact is that [the] market is much undersupplied in 2022,” according to Barron’s. “Even if global tensions reduce in the next weeks, high oil prices in the near term are here to stay.”

When will gasoline prices begin to decline once more?

Experts predict that gas prices will continue to rise in fits and turns for the next six months, if not longer. When they will come to an end is highly dependent on how the situation in Ukraine develops.

“It’s difficult to make any guarantees about where we’re heading, how high we’ll go, or when we’ll get there,” GasBuddy’s de Haan said earlier this month in a video update.

“At this moment, we have no idea what will happen or what escalation will occur next to drive oil prices higher,” he said. “And when might this peak occur? Again, these are extremely difficult questions to accurately answer given the current state of the situation. We may believe that this week will be the pinnacle, but something unexpected may occur next week, drastically altering the scenario.”

While Russia supplies only around 8% of the oil and petroleum used in the United States, the country supplies roughly 30% of the crude and almost 40% of the gasoline used in the European Union. The price of gas in the United States cannot be disentangled from global market conditions, analysts believe.

“It’s not practical, in my opinion, to isolate [the US] and become energy self-sufficient and then say, ‘Sorry, people, we’re independent and don’t care about you,'” energy analyst Rachel Ziemba told CNN.

Vice President Joe Biden

President Biden of the United States of America is releasing barrels from the Strategic Petroleum Reserve to help meet increased gas demand.

President Biden has pledged to implement a strategy to “reduce gas prices” in response to the Russian incursion.

The US and other International Energy Agency members agreed to release 60 million barrels of oil from their strategic reserves, with the US providing half.

Biden has pushed US corporations to expand drilling and production: Biden granted 25% more gas and oil drilling licences in 2021 than President Donald Trump did in his first year in office. However, completing a new well and bringing the oil and gas to market might take up to six months.

There is also the option of obtaining energy products from alternative sources: the US has been attempting to improve relations with Venezuela, which has been prohibited from selling oil to the US since 2018, as well as negotiating a new nuclear nonproliferation treaty with Iran, which would reintroduce Iranian oil to the market.

How can consumers save money at the pump?

We can’t do much about the price of petrol, but drivers can cut back on unnecessary journeys and search around for the best deal, even crossing state lines if necessary.

Gas Guru, for example, searches for the lowest gas prices in your area. Others, such as FuelLog, monitor your car’s gas mileage and can assist you in determining whether it is getting adequate fuel economy. Additionally, many gas station companies offer loyalty programmes, and credit cards offer cash back on gas purchases.

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Vincent of DTN recommends against hoarding gas or taking other extreme tactics, but does advocate for increased gas budgeting. For a long time, he continued, high energy prices have been a significant driver to inflation and will continue to be so.

“When the cost of petroleum increases, gasoline prices tend to reflect the increase fairly rapidly,” he remarked. “However, even when crude prices decline, gas prices tend to remain higher for a longer period of time.”

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