The Biden administration has made much of its success in reducing the financial burden on American motorists since the summer, but recent increases in gas prices have taken the wind out of their sails. Analysts say that the loss of refining capacity in California and Ohio, as well as rising demand in recent weeks, are contributing to the increase in gasoline prices, which follows a rise in crude oil prices.
According to AAA data, the national average price of regular gasoline hit $3.891 per gallon on Friday, marking an increase of more than two weeks. That’s more than usual for this time of year but less than the record high of about $5.02 set in June.
Gasoline Prices in U.S. Rise for a Second Week
It’s clear that California has seen the largest price increase. Prices are hovering around $6.39 per gallon, which is very close to the state record of $6.44 set in June. Due to several refineries in the region closing for maintenance, gas prices there and in other Western states like Nevada and Arizona spiked.
If this trend continues, the White House may feel more pressure to take immediate action to stabilize prices. After Russia invaded Ukraine, the price of crude oil and other forms of energy shot through the roof, leading to a subsequent increase in gas prices that pushed up consumer prices generally and became a political liability for politicians.
In the summer, in response to the rise in gas prices, President Biden scolded energy companies for profiteering on consumers, released oil from strategic reserves, and encouraged Saudi Arabia to increase oil production. As people became more concerned about the slowing global economy and demand slowed, gas prices began to fall.
The White House frequently highlighted the decline and the savings it would offer drivers as the streak of declines reached 98 days. There has been renewed pressure on White House officials to address the issue in light of the recent increase. On Thursday, National Economic Council Director Brian Deese urged energy companies to reduce pump prices.
“If you look at the gap between wholesale and retail prices, it has come down,” he said during a press briefing. “It hasn’t come down enough — right? — but it has come down.”
Analysts have predicted that the refinery shutdowns will only be temporary, and the fact that Americans drive less in the winter may help keep prices from rising as dramatically as they did in June. As the world’s major oil producers agreed to cut production this week, crude oil prices rose nearly 17 percent, making it difficult to predict what will happen next.
A sustained increase in gas prices could affect the outlook of businesses and consumers, in addition to the political repercussions. The drop in gas prices in July was a major contributor to the CPI coming in higher than expected, giving some hope that inflation may have peaked.
Phillips 66’s Washington State refinery and Valero and Chevron’s refineries in the San Francisco area are among the West Coast refineries that have closed.
In September, a blaze at a BP-owned refinery in the Toledo, Ohio, area forced the closure of the facility. Bloomberg News reported at the end of last month that unnamed sources said it might not reopen until early 2023. As of this past Friday, the average price of a gallon of gas in Ohio was $3.939, up from $3.609 a month ago.
Why are gas prices so high?
Psychopaths never let a good crisis they created go to waste. In 2020, the USA was a net exporter of petroleum (crude & products). USA’s main source of foreign petrol product = Canada.Why are they high in your country? Same reason?#gas #PetrolPrice pic.twitter.com/YtOKdgAfmb
— Carolina Rises 🔥🐦🔥 (@Carolina_Rises) March 6, 2022
Both Chevron and Phillips 66 have stated that they will not comment on the inner workings of their refineries. Concerning the refineries, neither BP nor Valero responded immediately to inquiries. Analysts have noted that refineries rarely give public notice of closures or announce when they plan to reopen.
As a result of Governor Gavin Newsom’s announcement last week that California could begin production of its winter blend of gasoline early, prices in California and elsewhere have decreased slightly. This is because the winter blend contains fewer additives that protect against environmental conditions in the summer. AAA spokesman Devin Gladden speculated that the introduction of the winter blend, combined with the possibility of slowed demand in the fall and winter driving seasons, could help bring prices back down.
Some Democratic lawmakers in Washington, DC have also called for Mr. Newsom to call a special session of the California Legislature to consider “a windfall profits tax” on energy companies that are profiting from high prices, which he announced on Twitter on Friday. In May, the United Kingdom announced it would impose a similar tax on the “extraordinary” profits of oil companies.
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