Here’s Why Gasoline Prices Are Rising Again

Prices at the gas pump are rising again as refineries switch to producing jet fuel and diesel instead of gasoline, and with demand rising ahead of the summer driving season.

Prices across the country were already high before the recent jumps. The Russian invasion of Ukraine affected oil markets and hit global gas prices hard, driving prices up at the pump as governments cut energy supplies to Moscow.

But prices are now rising, averaging $4.48 a gallon on Monday.

This is about 40 cents up from last month, when prices were at $4.08. Most of the recent jumps have come in the past few days as prices rose 16 cents a gallon between May 9 and May 16.

As much as high gas prices affected the 2008 election, when Republican vice presidential nominee Sarah Palin criticized Democratic energy policies, today’s prices are causing political controversy this year. Republicans get President Biden’s policies wrong, while Democrats target companies with alleged price gouging.

Experts say the latest jump is linked to a variety of factors including the lack of oil refineries that convert crude oil into gasoline.

Prices of both diesel and jet fuel, which are also made at refineries, have soared, and experts say many refineries are moving toward making those more profitable products.

said Matt Kimmel, senior research analyst for refining and oil markets at Wood Mackenzie.

Even before the recent setbacks, recent refinery shutdowns have slashed the country’s ability to produce gasoline, said Patrick de Haan, head of petroleum analysis at gas price app GasBuddy.

In 2019, a refinery in Philadelphia caught fire; In 2020 a Canadian refinery Closed due to COVID-19It has since been announced that it will switch to a biofuel-powered process; And last year, a refinery in Louisiana closed after flood related to Hurricane Ida.

“The United States now has 1 million barrels per day less refining capacity than it did in 2019 at a time when we need every barrel of energy,” de Haan said.

Analysts said these supply problems combine with rising demand for disc drivers.

“Usually … refineries make more gasoline before the summer driving season,” said Susan Danforth, Wood Mackenzie research director for oil and liquid natural gas in the Americas market.

“Usually this is peak gasoline demand in the US, people are traveling on the road, but because the price of diesel is very high … we’re seeing kind of this off-season trend,” Danforth added.

The gasoline business is also playing a role, said Tom Kluza, global head of energy analysis at the Oil Price Information Service.

“In the past couple of days, they have been buying gasoline futures and selling diesel futures, betting that gasoline is going into season and will need to get a higher price than diesel,” he said.

Futures contracts are agreements to buy or sell a certain amount of a product at a certain date in the future. Klosa described them as the “main driver” of prices.

The higher prices come as the Biden administration and the Federal Reserve are generally battling inflation. President Biden recently described dealing with inflation as his most important issue.

Democrats worry that higher prices on everything will make it difficult for the party to hold onto majorities in the House and Senate. The party has small increases in both houses, and the president’s party usually loses seats in the first midterm elections regardless of the economy.

House Democrats are trying to focus on price gouging. This week, home expected to vote on legislation that makes it illegal to sell fuel at an “unreasonably excessive” price and “exploit” the situation in an energy emergency.

The legislation would enable the Federal Trade Commission to take legal action against companies selling at such “excessive” prices.

The legislation must pass the Democratic House, but it is unlikely to go anywhere in the Senate, where Democrats will need 10 Republican votes to remove procedural hurdles.

Kloza said he was skeptical of the Democrats’ allegations of price gouging, calling them “attitudes.”

“All the people in the market – I mean thousands and thousands of people – are raising the price. It’s not that ExxonMobil is saying ‘I’m going to sell my diesel for $200 a barrel,'” he said.

But Democrats who support the bill point to massive profits for the company and recently announced shareholder buybacks.

“If the oil companies were only passing costs on to consumers, we wouldn’t expect to see a huge rise in profits,” said a spokesman for Rep. Katie Porter (D-Calif.), one of the bill’s sponsors. “These companies continue to raise prices despite their record profits, putting pressure on families in the process.”

A spokesperson for fellow sponsor Rep. Kim Shearer (De Wash) also noted, “Not every state has a price gouging law, so this will also ensure that all Americans are protected from price gouging.”

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