Home/Articles/Gas prices are up, but are they at an all-time high?
US gas prices are rising as the economy rebounds from the COVID-19 pandemic’s effects. A gallon of gas costs an average of $3.14 a gallon as of July 2021, according to data from the Energy Information Administration (EIA). That’s higher than the last rise in gas prices in 2018 when gas cost an average of $2.95 a gallon.
The price at the pump has bounced up and down often since the 2008 recession. The average price of a gallon of gas was as low as $2 in February 2016 during the US fracking boom and as high as $4.61 in April 2012, as the economy recovered from the Great Recession.
The annual average price for a gallon of gas hit a record high in 2012 of $4.28.
Gulf Coast states gas prices are low due to nearby oil refineries.
Gas prices vary by region and are influenced by state and local taxes, supply chain issues and operating costs, according to the EIA. For example, a gallon of gas is cheapest in the Gulf Coast region, where there are multiple oil refineries, low gas taxes, and efficient pipeline and railroad infrastructure. The West Coast region has the highest average price of gas due to higher gas taxes and stricter clean energy standards than other regions. Since 2016, West Coast gas prices have been about 60 cents more expensive than the average in the other regions for the last five years.
Gasoline in the West Coast was 78 cents higher than the national average in 2020.
Crude oil costs are the biggest factor in gasoline prices. When crude oil prices increase, as was the case in 2008, gasoline prices increase as well. The price of a barrel of crude oil depends primarily on supply in the market. When major oil producers create more supply, the price of crude tends to drop. When there are disruptions to oil supply or infrastructure, such as military conflicts in the Middle East or the COVID-19 pandemic, crude prices can rise, taking gas prices with them.
The early months of the pandemic caused global drop in demand for oil. In turn, crude prices dropped to $18 per barrel. But as the economy recovered in recent months, so did demand for crude. As of April 2021, the average price for a barrel of crude oil was $60.
The annual average price of a barrel of crude oil, a major component of gasoline, has increased since 2000.
Taxes, refining, distribution, and marketing costs also affect gas prices. In 2020, the price of crude oil accounted for 43% of gas prices, less than the 10-year average of 56%. The second-largest component of gas prices in 2020 was refining costs and profits, followed by federal and state taxes at 22%.