Why Are Gas Prices So High? – Forbes Advisor

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Gas prices just won’t stop climbing: The national average price of gas is now a record $4.60 per gallon, and has been creeping up or staying flat every day since Apr. 24.

Nearly every state is now seeing an average gas price above $4 per gallon, according to data from AAA, and consumers are paying an average of $1.50 per gallon more than they were this time last year.

Despite a decrease in gasoline demand, crude oil prices remain volatile. Many countries have cut off oil imports from Russia, one of the world’s top oil producers, due to the war in Ukraine—and it continues to rattle crude oil markets and continue to push prices upward.

It’s unclear when consumers will feel relief at the pump, which is adding stress to consumers’ summer plans. A Forbes Advisor poll found that the cost of travel, which is driven in part by gas prices, is affecting plans for 54% of summer vacationers.

In April, the US Energy Information Administration’s (EIA) Short-Term Energy Outlook predicted the average price of oil to fall by the end of this year—but noted its price forecast was highly uncertain due to existing and future sanctions on Russia and how it will impact the global oil market.

But even before the US banned Russian oil imports, gas prices were becoming unmanageable for many Americans, and lawmakers have struggled to find a solution.

Democrats introduced a Senate bill in mid-February to stop charging federal tax (18.4 cents per gallon) at the gas pump through 2022. The bill has been widely criticized for being unlikely to help consumers feel much relief—and it has made little movement in the chamber.

Some states are now stepping in to provide rebate payments for residents to alleviate some of the financial pain of soaring gas prices.

If you need help managing higher gas prices in the meantime, there are ways to save.

5 Ways to Save Money on Gas During the Summer Travel Season

1. Use Gas Apps to Find Cheap Gas Near You

There are a handful of helpful apps that will show you nearby gas stations and real-time prices of their gas. GasBuddy, for example, lets users update nearby gas prices and allows you to search by current location, ZIP code or city. GasBuddy also offers a free rewards card for users that provides discounts on gas. The card links directly to a checking account and is sent via mail.

Swiping the rewards card and that gas pump can save users up to 25 cents per gallon at the pump, according to GasBuddy’s website. GasBuddy makes money by selling customer data preferences to station operators, according to USA Today.

2. Enroll in Gas Rewards Programs

Those with a favorite gas station chain can benefit from enrolling in its rewards program. These programs reward returning customers by providing discounts every time they fill up.

Exxon Mobil Rewards+ earns three points per gallon on fuel, and two points for every $1 spent in convenience stores and car washes. Every 100 points redeemed will provide $1 off your purchase, up to a maximum of 5,000 points redeemed at once, totaling $50 in savings.

3. Take Advantage of Grocery Store Rewards Programs

Numerous grocery store chains have loyalty programs that provide gas rewards. Kroger’s fuel points program provides one fuel point for every $1 spent in Kroger stores.

Purchasing gas at Kroger gas stations provides the best redemption value of up to 1,000 fuel points for $1 off per gallon; at participating Shell stations 100 points can be redeemed for 10 cents off per gallon.

There’s no limit to how many fuel points can be earned each month, but they expire the last day of the month after they are earned—so be sure to use them each month to maximize your discount.

4. Buy Gas with a Rewards Credit Card

Responsible credit card usage can reap rewards at the gas pump. Some credit cards have specific spending categories with high-percentage earning amounts, including gas.

Be sure to pay off your credit card balance in full each month to avoid extra costs to cover interest. Check out our picks for The Best Credit Cards For Gas.

5. Fill up on Mondays

A Feb. 2022 survey by GasBuddy found that gas is the cheapest on Mondays in most states across the country, and Wednesday, Thursday and Saturday were the most expensive days.

Why Are Gas Prices So High?

High demand for crude oil and low supply are pushing gas prices upward. And though the Federal Reserve has raised interest rates twice so far this year—and is planning on more raises in the near future to eventually nudge prices back down—there are other factors at play internationally.

Crude oil, the natural resource used to produce gasoline and diesel fuel, has seen dramatic changes to its supply throughout the pandemic. When Covid-19 first hit worldwide, and fewer people were on the roads, major oil-producing companies cut back on their oil production.

In April 2021, the Colonial Pipeline, the nation’s biggest fuel pipeline, was the target of a cyberattack that forced it offline for six days. The shutdown led to gas shortages nationwide, and pushed average prices above $3 before Memorial Day, when they were expected to rise.

A breach and spill in a key pipeline that supplies fuel to the southeast occurred on Oct. 1, and repairs were slowed by heavy rain and flooding.

The war in Ukraine is being cited as a compounding factor in these issues. Russia, which produces about 10% of the world’s oil supply, is now being sanctioned due to its invasion of Ukraine. The United States has completely banned Russian oil imports, which also means what remains of the global supply is also being squeezed.

OPEC+, an alliance of oil-producing countries that includes Russia, will provide a slight increase in oil production by June. But a proposed European embargo to ban Russian crude imports within the next six months could cause prices to soar even higher than they are now, even with increased production, according to the Wall Street Journal.

President Joe Biden has vowed to release one million barrels of oil per day from the nation’s strategic reserves to push gas prices down. So far, though, it appears that the release isn’t making a dent in the inflationed prices.

The combined consequences of these scenarios mean states all over the country are seeing sky-high gas prices. For example, California’s average gas price per gallon is $6.07, and Illinois’ currently sits at $4.97.

Read more: Why Is Inflation So High?

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