The national average price for a gallon of regular gasoline was $3.73 yesterday, according to AAA.
It’s $3.84 this morning.
Patrick De Haan, head of petroleum analysis at price tracker GasBuddy, predicted this morning that the national average would crest $4 per gallon on March 24.
Alaska, Hawaii, Nevada, New York, Oregon, and Pennsylvania are already there. California has fond memories of $4/gallon gas. They’re at $5.07 today.
How high can prices go? And what can be done to bring them down?
The Causes
Gas prices normally rise in the spring. America’s oil refineries slow their production for a few weeks in March and April as they undergo maintenance ahead of the busy summer driving season.
But the primary cause of the current price surge is Russia’s invasion of Ukraine.
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The U.S. imports about 7% of its petroleum from Russia, according to the U.S. Energy Information Administration. The fuel in American gas pumps mostly comes from domestic sources and imports from Canada and Mexico. But Russia is third on the import list, ahead of even Saudi Arabia.
So, you might think America’s sanctions on Russian oil are driving up prices.
America Isn’t Sanctioning Russian Oil
But America hasn’t sanctioned Russia’s oil production. The country has enacted a long list of financial sanctions against Russia, Russian President Vladimir Putin, and some of his most powerful supporters. But the U.S., so far, hasn’t sanctioned Russian oil and gas exports.
Such a move could even backfire, some argue. “Given high oil and gas prices, cutting off Russian oil and gas could drive prices up to Putin’s benefit,” White House Press Secretary Jen Psaki told reporters last week.
But sanctions on the rest of Russia’s economy have the market scared. “Russia’s invasion and the responding escalating series of financial sanctions by the U.S. and its allies have given the global oil market the jitters,” says AAA spokesperson Andrew Gross. “Like the U.S. stock market, the oil market responds poorly to volatility.”
Adam Pankratz, a professor at the University of British Columbia’s Sauder School of Business, told Al Jazeera that some oil buyers might also be “self-sanctioning,” saying, “they don’t know exactly what’s going to get caught up in the Russian sanctions, and they don’t want to risk getting an investigation for having imported or dealt with a Russian company when they shouldn’t have been doing that.”
What Can Be Done?
The federal government has one short-term relief valve it can use to lower prices slightly. The U.S. Strategic Petroleum Reserve is the world’s largest emergency stockpile of oil. It can house up to 714 million barrels of oil in what the U.S. Department of Energy calls “a complex of four sites with deep underground storage caverns created in salt domes along the Texas and Louisiana Gulf Coasts.”
The U.S. consumes between 15 and 20 million barrels per day, according to Department of Energy estimates. So, if the federal government used the strategic reserve to keep America’s cars and trucks running as cheaply as possible, it could hold out for more than one month but less than two.
The White House authorized the sale of 30 million barrels from its stockpile this week in an attempt to keep consumer heating and transportation prices down. The move was matched by allies, who collectively released another 30 million from their own stockpiles.
But the reserve exists for strategic, not economic, reasons. The government is highly unlikely to drain it in an attempt to keep gas prices down.
Some legislators have proposed pausing federal gas taxes to temporarily lower prices as well. But that move would do nothing to arrest supply problems.
So the hard truth is that prices are going to continue to rise.
As many remember from last summer’s Colonial Pipeline hack, Americans could well make the problem worse by panic buying as prices climb.
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