Households are now shelling out $5,000 per year on gasoline, according to Yardeni Research, up from $2,800 a year ago. Retail diesel prices hit an all-time high of $5.577 a gallon on Wednesday, up 76% over the past year. The numbers are not adjusted for inflation.Įvery state is now averaging more than $4 per gallon for the first time on record, while California's statewide average is now above $6.ĭiesel prices are rocketing higher too. The national average for a gallon of gas hit a record $4.589 on Thursday, according to AAA, up from $3.043 at this time last year. Refiners are running nearly at full capacity, and crack spreads - the difference between refiners' cost of oil and the price at which they sell their products - for diesel are now at record levels.Īll of these factors are pushing gas prices higher. Meanwhile, petroleum product exports from Russia are being hit by sanctions, leaving Europe looking for alternate suppliers. The amount of oil that refiners can process has fallen since the pandemic, especially in the Northeast. Refining is the key step that turns crude oil into the petroleum products consumers and businesses use daily. Taxes, distribution and refining costs also influence prices.Ĭonstrained refining capacity is beginning to play a larger role. Oil prices make up more than half of the ultimate cost for a gallon of gasoline, but it's not the sole factor. They're facing the same issues that are playing out across the economy, including labor shortages and rising prices for parts and raw materials, such as sand, which is key to fracking production. Oil companies are reluctant to drill after pledging capital discipline to shareholders, and executives say that even if they wanted to pump more they simply can't. The rapid rise in oil and therefore fuel costs is causing a headache for the Biden administration, which has called on producers to pump more. To put that number in context, at the beginning of 2022 a barrel of crude fetched $75, while at this time last year prices were closer to $63. Oil has since retreated from its post-invasion highs but remains firmly above $100. In November, President Joe Biden tapped the Strategic Petroleum Reserve in a coordinated effort with other nations, including India and Japan, in an effort to calm prices. This led to a surge in demand and an increasingly tight oil market beginning last fall. Economies have since reopened, manufacturing has revived, and people are driving and flying again. oil benchmark, briefly traded in negative territory. Demand dropped so suddenly that West Texas Intermediate crude, the U.S. People weren't going anywhere and businesses were shuttered, so far less fuel was needed. Then producers slashed output further during the throes of the pandemic, when the need for petroleum products fell off a cliff. Even before Covid, energy producers cut back on investment and less profitable projects under pressure from low prices and institutional shareholders demanding higher returns. Russia's invasion of Ukraine is the latest catalyst to push crude higher, but prices were already on the move ahead of the war. ![]() The surge in gasoline prices is thanks, in large part, to the jump in oil prices. Personal Loans for 670 Credit Score or Lower ![]() Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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