Why are gas prices so high?

Economy

(WETM) – Drivers’ wallets are feeling more and more strained as the days of sub-two-dollar gasoline are long gone.

It might seem like forever ago that the national average was $1.76, but in just over a year and a half, the price has skyrocketed to $3.41, according to AAA.

And in New York, it’s even worse. AAA reports that the Nov. 18 average across the state is $3.56 (but luckily, Elmira is about 10 cents cheaper).

The early days of the pandemic in the spring of 2020 saw the country go home and stay there, and gas prices simultaneously plummeted, reaching their lowest point in years.

But now experts are predicting that the slew of shortages and price hikes across the economy will continue well into next year.

But what is the culprit behind the ever-climbing prices?

Much like other products, the cost of gas is very closely tied with the pandemic. As more and more of the country reopens, more people are driving, which means that oil producers are having a hard time keeping up with the demand for gas.

Plus, oil production in the Gulf of Mexico took a hit from Hurricane Ida this summer.

The U.S. Energy Information Association broke down the cost at the pump and how we arrive at that number. Factors include the cost of crude oil (the most important factor), taxes, refining costs and profits (which vary by season and region), and distribution and marketing costs. The EIA’s list of major factors that play into crude oil costs can be found here.

And of course, politics comes into play, as well.

Earlier this year, as gas prices really started to climb, Republicans took aim at President Biden, blaming his “policies” and only using his cancellation of the Keystone Pipeline as a specific example. But Biden’s policies don’t have anything to do with prices that have largely been driven by the pandemic and worldwide shutdowns. Plus, the Keystone Pipeline carries crude oil through the midwest; it didn’t affect the East-Coast gas prices Republicans were talking about when they brought up this argument earlier this year.

And just this week, Biden asked the Federal Trade Commission to look into whether oil companies are using “illegal conduct” to raise gas prices.

He pointed to the difference between the rising price at the pump and the decreasing costs for the oil companies.

“In the last month, the price of unfinished gasoline is down more than 5 percent while gas prices at the pump are up 3 percent in that same period. This unexplained large gap between the price of unfinished gasoline and the average price at the pump is well above the pre-pandemic average.”

“The bottom line is this: gasoline prices at the pump remain high, even though oil and gas companies’ costs are declining,” he added.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

If you have a news tip or a correction to the story you can email it to us through this link. If you would like to send a comment to the author of the story, you can find their email on our Meet the Team page.

Trending Now