As to Why Gas Is So Expensive?
“Ugh How come gas is so expensive? And then, after shelling out to fill it up, you yell at the heavens and
You're not alone if you're struggling to make ends meet due to the current state of gas prices. Gas prices are at an all-time high, and the resulting financial strain is becoming increasingly noticeable. The average price of a gallon of gasoline reached a new record high of $5 after a steady ascent in which each new price kept setting records. on June 14, 2022, it will cost $1.01 per gallon. 1 Gross During the summer, prices fell below $4, but is that a true victory? In addition, there is talk that they might be climbing again.
So, in practical terms, what do these unprecedented totals indicate? Scientists predict a $2,000 increase in annual gasoline costs for the typical American family. 2 Great But don't throw away your car keys just yet; you still need transportation. The next time you fill up, we have some suggestions to make the experience more bearable. But first, let's examine the topic that has everyone talking: why gas is so expensive now?
Inflation, the Russia–Ukraine conflict, crude oil prices, tourism, and a dearth of refineries all play a role, as you correctly surmised. But the age-old question, "Why are gas prices so high?" finally has an answer. " It's not quite that easy The high cost of gasoline is due to a complex interplay of many factors. What follows is a step-by-step analysis of all the factors at play here.
To begin, let's address the elephant in the room, the dreaded I-word. The astronomically high rate of inflation (at 8 percent as of this writing) Increased crude oil prices (up 2% over the previous 12 months, the highest in roughly 40 years) have had a significant impact on the cost of gasoline. In fact, gas prices have been on the rise since they were around $2 per gallon in December of 2020. Price per gallon: $ 25 4
In response to those who claim that the conflict between Russia and Ukraine is the sole cause of rising gas prices, you can now confidently respond, "Well, actually..." Not the whole picture at all ”
That reminds me...
Fighting in Russia and Ukraine
So, to restate: gas prices were rising before Russia invaded Ukraine. However, the war between Russia and Ukraine added fuel to the fire.
The average price of a gallon of regular gasoline hit a record high (at the time) of $4 on March 8, 2022. 17; the previous record was set in 2008 and has since been broken. The price of gasoline increased by 11 cents over the course of the night and by more than 50 cents from the previous week. Insane! 6
U.S. imports of Russian oil, natural gas, and coal were banned the same day President Biden signed an executive order banning their import. S The significance of this is 7 Since Russia is a major oil exporter, of course! It's essentially a very large gas station (without the fresh hot dogs).
In the end, gas prices reached an all-time high of $5, capping off a crazy run of record highs. As of 6:01 PM, June 14, 2022 8 After reaching that all-time high, gas prices gradually dropped throughout the summer, eventually approaching the $3 mark. However, they have recently begun to gradually rise again. 9
Gas prices have a tendency to decrease in the fall after the end of the summer travel season and in the winter after the end of the holiday travel season, regardless of what else is going on in the world at the time. The current national average for gasoline costs is $4. As a result, some people may have to scale back their holiday vacation plans by 10 But others will fork over the cash and see it as the least they can do to spread holiday cheer.
Values of Crude Oil
Concerning the issue of high gas prices, the investigation must go further. Increases in the price of crude oil have a ripple effect on consumer prices. Russia, as we have already mentioned, is a major oil exporter, and the war has caused oil prices to soar to over $120 per barrel. Price per barrel of crude oil is around at the moment. 12
However, oil prices may be on the rise again after OPEC (the Organization of the Petroleum Exporting Countries) said it would reduce output in an effort to boost prices. The Organization of Petroleum Exporting Countries (OPEC) is a group of oil-producing countries (including Russia) that tries to regulate oil prices. They can unilaterally decide to increase prices (by reducing production) at any time, and the United States will be powerless to stop them. Totally terrible, right?
OPEC's goal is to maximize profits without raising prices so much that demand drops precipitously.
The Oil Industry's Refining Facilities
The oil industry is largely responsible for the recent spike in gas prices. If gas supplies are low, that's bad enough, but if refineries can't keep up with demand, that's a whole other problem. As it turns out, that's exactly what's happening right now. On an average year, before summer arrives, refineries ramp up output to ensure a supply surplus. Oh, no, not this year As of this season, gas supplies are at their lowest level since 2019. 14
One more thing can be added to this list as well. Vice President Biden's top priority is weaning the country off of gasoline-powered vehicles. Shortly after taking office, he halted construction on the Keystone XL oil pipeline. Since oil and gas firms believe they will be forced out of business by new clean energy regulations, they have little motivation to spend billions on constructing new refineries.
Where Does the Money Go to Help Reduce Gas Prices?
Interesting thought The government has some aces up its sleeve, so let's go over their past and potential moves.
Analyzing the Effects of Gasoline Stimulus
Say what You read that correctly Talk of gas stimulus checks increasing in likelihood Democrats have proposed the Gas Rebate Act of 2022, which would provide a $100 monthly rebate (plus $100 for each dependent) to citizens of the United States in order to offset the rising cost of gasoline. With this plan, 16 will continue receiving payments in 2022 for any month in which the national average gas price is $4 or more.
Just wait until something is officially approved before you start filling up on the government's dime. However, we are aware of the government's track record of distributing stimulus funds. That's That Keep an eye on the situation, and we'll let you know if it begins to pick up speed.
Oil Stockpile for Emergencies
To combat a potential oil shortage, President Biden ordered the release of 50 million barrels of oil from the Strategic Petroleum Reserve (U. S a hidden gas tank) didn't do much to lower gas prices. Seventeen months later, at the close of March 2022, Biden announced that he would be draining the Strategic Petroleum Reserve at the rate of one million barrels per day for the next six months. 18 It was hoped that this would slow down the irrational increase in prices, but it had little effect.
Let's be real, gas prices are beyond anyone's control. You have some say over how you readjust your spending habits in the interest of saving money on gas. We still have hope for this. It's understandable to be frustrated by the current state of gas prices, but there's no need to give up hope. Stunning, we know A headline like that wouldn't appear on a mainstream news broadcast.
We'd all love to be able to run up to the gas station's sign and turn back the exorbitant prices, but unfortunately, we can't. However, you still have control over the situation
Despite the high cost of gas, there are ways to cut costs.
Does it stink that gas prices are so high? That's right, they undeniably do Oh, but here's the kicker Folks, we've been here before. We've all made it through times when gas cost an arm and a leg. Again, we'll be here to do it. But here's the deal: you'll need to make some changes to your spending habits in order for this to be feasible. Do not let that discourage you. The price of gasoline can be reduced in numerous ways. Some examples are as follows.
1. Enroll in a gas rewards or cash-back program.
Gas rewards programs are available at many of the stores you already frequent, such as Kroger and Costco (just make sure you're signing up for free rewards and not credit cards). Also, before you fill up at the gas station, be sure to use a cash-back app like GetUpside to earn a little extra money.
To find the lowest gas prices, use an app.
Since there are a variety of apps available, you can avoid wasting gas by driving all over town in search of a bargain. You can find an app to do that. Instead of driving all over town in search of cheap gas, use an app like GasBuddy or Waze to find the lowest prices in your area.
Make a single journey, 3.
I have a long list of errands to run this week. Don't make eight separate trips to the store throughout the week; rather, get it all done in one. You'll feel better mentally and have more gas money left over.
We know carpooling has a bad rep, but bear with us. Sharing a ride to the workplace, the classroom, or the soccer game is a fun way to get to know your fellow humans and save money on gas. That can't be beaten.
Having someone else drive for you once or twice a week can be a welcome relief if you regularly find yourself groggy or frustrated by the time you reach work. It's comparable to having a chauffeur (albeit without the trademark black car and top hat).
5 Revise your financial plan
The thing is, with gas prices as high as they are right now, you'll have to make some sacrifices in order to keep your budget in order. Although disappointing, this is by no means a catastrophe. I believe in you. The only thing you need to do is make a few small sacrifices elsewhere in your budget to make sure you have enough money for gas.
It's fine if this means putting off a few Friday morning indulgences like a fancy coffee or a new outfit until the end of the month. Modify your spending habits until you reach a comfortable financial balance.
EveryDollar, our free budgeting app, makes it simple to make instantaneous changes to your budget when unexpected expenses arise (like a spike in gas prices). Get the comfort you deserve by eliminating all anxiety about how much money you'll need for your next gas purchase.
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