Gas Prices Have Spiked Again, Here’s Why

A recent report stated that unleaded regular gas underwent a 14% price jump when considering at the national average price of gas. Their report cited AAA data, which says that nationwide, the price of gas has increased more than 40 cents per gallon since 2024 began. 

Gasoline comes in three primary grades — regular, mid-grade, and premium (via U.S. Energy Information Administration (EIA)). Each grade has a different octane level which influences engine performance and efficiency.

The American Automobile Association (AAA) keeps a running tally of the retail price of gas. The current national average is $3.536 per gallon for regular fuel. For comparison, the highest recently recorded national average price for regular unleaded gas was $5.016 in June 2022.

Over the past decade, gas prices have experienced significant fluctuations (via EIA). A graphical analysis shows peaks typically during the summer months and lows in winter, reflecting seasonal demand changes.

The “spring bump” as some experts call it, describes customer behavior patterns to demand more fuel as they take increasing trips in warmer weather. 

Increased gasoline consumption has direct environmental implications, including elevated air pollution and greenhouse gas emissions (via EIA). The switch to a summer blend, while more costly, plays a crucial role in reducing these impacts during months of high vehicle use.

Patrick de Haan, the head of petroleum analysis at GasBuddy, made comments to ABC that suggest this price increase falls within expert expectation.

The Organization of the Petroleum Exporting Countries (OPEC+) significantly influences global oil prices through its production decisions (via Investopedia). By adjusting output levels, OPEC+ can tighten or saturate the market, directly affecting gasoline prices worldwide.

The switch to the summer blend of gasoline is part of an effort to mitigate the environmental impacts of the increasing amounts of drivers on the road. 

Technological advancements in refinery processes have improved the efficiency of producing both winter and summer gasoline blends (via NACS).

Despite drivers decrying rising gas prices when they happen, demand for gas continues to increase.

As investments in renewable energy sources like solar and wind power increase, the shift towards cleaner energy could decrease the demand for gasoline.

Despite an increase in investment and a loyal customer base, EVs have so far failed to capture the attention of many American auto customers. Factors like safety, reliability, and high up-front costs keep people away from purchasing EVs, leaving them to invest in gas-powered ones.

Electric Vehicle (EV) technology has seen significant advancements, including longer battery lives and shorter charging times (via SparkCharge). These improvements make EVs more appealing, potentially reducing gasoline demand as more consumers opt for electric options.

While the current gas price jump falls within analyst expectations, there are still reasons to worry that the price may continue to rise. 

Geopolitical conflicts, such as tensions in the Middle East or the Russia-Ukraine war, can severely disrupt global oil supply chains (via Humanities and Social Sciences Communications). These disruptions lead to fluctuations in oil prices, affecting gasoline costs at the pump.

What may confuse some gas customers is that the price of gas at the pump is going up despite US oil production reaching historic levels. Typically, as a market rule, when the supply of something goes up, the price for that good goes down.

According to the Center for Strategic & International Studies, the U.S. status as a net oil exporter has reshaped global oil markets, influencing global pricing strategies. Exporting oil means that domestic production impacts more than just U.S. gas prices.

To explain this discrepancy one must look at the amount of oil that the US exports. All the oil the US produces does not go to its citizens.

Expert forecasts suggest that gas prices may continue to experience volatility due to factors like oil production levels, technological advancements in the energy sector, and geopolitical events (via IEA).

The cost to produce oil in the United States is not always the cheapest option, which incentivizes customers to not rely on United States oil and import it from elsewhere instead. However, because these customers are importing oil, they are subject to the price fluctuations that can happen with extreme world events.

To combat rising gas prices, consumers can adopt several strategies, such as utilizing fuel-efficient driving practices, maintaining regular vehicle servicing, and using apps to find the best gas prices.

de Haan thinks it’s likely that lower gas prices will return as the weather turns cold again in the fall. He remarked that when this happens supply and demand will come into a better balance, as more gas customers are off the roads sheltering from the weather.

The global shift towards electric vehicles and renewable energy sources marks a pivotal transition away from fossil fuels. This movement, aimed at combating climate change and reducing environmental impact, could lead to a decrease in gasoline demand.