Last week several gas stations in Washington state ran out of fuel, leaving the rest to reset their price boards. According to reporting from The Post Millenial, these boards will now have room for double digits to prepare for gas prices potentially becoming over $10 a gallon. Previously, these boards were programmed for only single digits. A spokesperson from 76 Gas Station in Auburn however did not confirm future prices will increase to $10 or more. But other factors make this a real possibility.
Gas Prices May Reach Double Digits
This 76 Gas Station sells race fuel in addition to the standard regular, plus, premium, and diesel fuel. Race fuel is sold from separate pumps and it has increased in pricing, perhaps leading to this reprogramming.
Meanwhile, gas stations are running out of fuel throughout eastern Washington. In Kennewick, Pasco, and West Richland — the Tri-Cities — drivers stop by the pumps and find notes explaining that there is no gas there. Some stations only have diesel left. This issue hadn’t been so prevalent in the past. As a result, the residents of these areas scramble to fuel their vehicles. [1]
Gas prices increased since President Biden entered the Oval Office in January 2021. His administration closed the Keystone XL and Enbridge Line 5 pipelines in a push for clean energy. However, it’s unclear how much these pipelines would affect the gas prices since they would not have been built by now anyhow.
Additionally, Russian hackers targeted the Colonial Pipeline, creating a gas shortage in several states in the South and along the East Coast. More recently, Biden canceled a one-million-plus acre oil lease in Alaska. Many had believed that this lease could have created more energy independence in the U.S. had it not been closed. Plus, the United States has banned the importation of Russian oil and gas after Russian President Vladimir Putin’s attack on Ukraine.
Read: A Driver Filed A Class Action Lawsuit Against 5 Gas Companies Over Rising Gas Prices
The Increased Price of Crude Oil
As the price for purchasing crude oil increases, this adds to the price of each gallon of gasoline to fill a car. The oil industry in the United States is run by independent companies and oil prices and drilling costs had been low in the past. But during the beginning stages of the Covid-19 pandemic, oil prices decreased to about $23 a barrel. This lowered production since it wasn’t profitable at the time. But now, crude oil costs over $100 a barrel, and U.S. production is still below the rate reached in 2020 before the pandemic. In April 2020, the weekly price dropped to $1.77 gallon, then reached $2.32 when Biden was voted in. [2]
Meanwhile, gas prices reached a record-high $4.59. In April, the price was $4.08 and in May 2021, only $3.00. This heightened energy cost is part of the elevating inflation rates, the highest rate in 40 years. As a result, premium gas is now typically $5.24, while it was $3.62 last year. Diesel went from $3.15 in 2021 to $5.57 a gallon today, according to the AAA. [3]
AAA spokesperson Andrew Gross blames these prices on the high cost of crude oil. “Even the annual seasonal demand dip for gasoline during the lull between spring break and Memorial Day, which would normally help lower prices, is having no effect this year,” Gross said in a statement.
Unfortunately, the end is not in sight. Matt Smith, a data analyst with Kpler, said that an average of $5 per gallon is “by no means beyond the realms of possibility. It’s going to hit the pocketbook far harder.“
Read: New Gas-Powered Cars Are Set To Be Banned In Canada & Here’s Everything We Know So Far
What Should We Do Now?
In late March, in a bid to lower gas prices, Biden announced the release of a million barrels of oil a day from the US Strategic Petroleum Reserve for the next half a year. This release may lower gas prices by about 10 to 35 cents a gallon, according to the White House. However, this may not be helpful long-term. “It will lower the oil price a little and encourage more demand,” said Scott Sheffield, chief executive of Texas oil company Pioneer Natural Resources. “But it is still a Band-Aid on a significant shortfall of supply.” Additionally, the White House is pressuring oil companies in the U.S. to increase their drilling and production rates.
In the meantime, drivers are trying to make due. Cutting down on unimportant trips and keeping an eye out for the best price, even across state lines, can help lower gas costs. Troy Vincent, senior market analyst at energy analysis firm DTN, advises against hoarding gasoline. Rather, he encourages creating a budget for gas. After all, these high prices and inflation are not going to go away in a day or two. “When the cost of crude rises, prices at the pump tend to reflect it very quickly,” he said. “But gas prices tend to linger higher longer even when crude falls.” [4]
Keep Reaidng: Keep an eye out for this gas pump scheme or you could end up paying for someone else’s gas
Sources:
- “Washington gas stations run out of gas, add extra digit in anticipation of $10 dollar prices.” The Post Millennial. Katie Daviscourt. May 17, 2022
- “The truth about gas prices and oil production.” The Guardian. Glenn Kessler. March 15, 2022
- “Gas Prices.” AAA.
- “Gas Prices Race Past $4 a Gallon in Every US State. How High Could They Go?”” CNET. Dan Avery. May 18, 2022