SALT LAKE CITY (ABC4) – While the national average price for a gallon of regular gas remains higher than we’ve seen in the last three years, prices are starting to dip slightly, according to a new report. But who – or what – is to blame for the current prices?
As AAA explains, the price we pay at the pump is largely dependent on driving habits and the supply of crude oil. The current dip in the national average price may be due to seasonal driving habit changes, according to AAA spokesperson Andrew Gross.
The U.S. Energy Information Administration (EIA) reports the total domestic gasoline stocks decreased by 1.6 million bbl to 212.7 million bbl last week. The demand for gasoline dropped from 9.5 million b/d to 9.26 million b/d. This dip, paired with an increase in the domestic crude oil supply, caused downward pressure on prices, AAA explains.
So what else impacts the price of gasoline?
According to EIA, there are four factors impacting the price tag:
- The cost of crude oil
- Refining costs and profits
- Distribution and marketing costs and profits
As EIA explains, the cost of crude oil is the largest component of the price of gasoline. Crude oil prices are, in turn, impacted by seven other factors, including supply, demand, and financial markets. Taxes are also impacted by multiple components, including taxes imposed by federal, state, and local governments. Refining costs and profits will vary by season and region within the U.S., EIA says, and are impacted by demand as well.
Who owns a gas station can also impact the price at the pump. According to EIA, some stations are owned and operated by refiners while others purchase gasoline from refiners and marketers for resale. The price set by individual retailers can vary greatly depending on numerous factors like where the station is, what the local hiring market is like, state and local fees, and sources for supply.
Here is a breakdown of what impacted the price of regular gasoline and diesel in September 2021, courtesy of the EIA.
While legislation can impact the price of gasoline, politicians – like the president – have limited control over what happens. The National Association of Convenience Stores reiterates the EIA, saying gas prices are largely dependent on oil prices, which are dependent on supply and demand. Presidential candidates may campaign on lowering gas prices but trends show that has yet to truly happen.
According to the NACS, as the last four presidents left office, gas prices were higher than when they entered office. Using EIA numbers, NACS shows:
- Bill Clinton left office with gas prices 39 cents higher ($1.06 on Jan. 25, 1993; $1.47 on Jan. 22, 2001)
- George W. Bush left office with gas prices 39 cents higher ($1.47 on Jan. 22, 2001; $1.84 on Jan. 26, 2009)
- Barack Obama left office with gas prices 49 cents higher ($1.84 on Jan. 26, 2009; $2.33 on Jan. 23, 2017)
- Donald Trump left office with gas prices 6 cents higher ($2.33 on Jan. 23, 2017; $2.39 on Jan. 25, 2021).
The organization notes the price during Trump’s administration was largely impacted by the COVID-19 pandemic when demand dropped. GasBuddy data shows the price for gasoline dropped around May 2020 and has since been steadily climbing.
As AAA reports, the demand for gasoline has also been increasing as the price increases. Officials say when the demand decreases, oil companies pulled back on production. Now that the demand is climbing, some oil companies are still working to meet demand.
In its mid-November report, AAA says pump prices will likely remain high as long as oil prices remain above $80 per barrel. Check here for 10 driving tips that will help you save money as prices remain high.