Gas Prices Are High And Will Probably Stay That Way For A While

There is a lot of demand and supply isn't keeping up.

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The national average for gas prices today is $3.48 per gallon, according to the American Automobile Association. Yesterday, it was $3.47 per gallon; a week ago it was $3.42; a month ago it was $3.30; and a year ago it was $2.49. For drivers, the trend isn’t great.

It varies by state, of course, because states have different taxes on gas. In California, which has the highest-priced gas in the country, the average price is $4.68 per gallon, while in Oklahoma, which has the lowest-priced gas, the average is $3.14. These prices are for regular, by the way; in New York, where I paid $3.65 per gallon to fill up yesterday, 87 octane, the average is just a penny higher, or $3.66.

Two Democratic senators are so upset about the situation that they are proposing legislation that would suspend the federal gas tax — which is all of 18.4 cents per gallon, and hasn’t changed since 1993 — until the end of the year, according to the Associated Press.

The [federal gas tax] goes into a trust fund that helps pay for highway construction projects and public transit.

The bill would require the Treasury Department to transfer general funds into the trust fund to make up for the lost gas tax revenue and keep the trust fund solvent, likely requiring additional borrowing.

“We need to continue to think creatively about how we can find new ways to bring down costs, and this bill would do exactly that, making a tangible difference for workers and families,” [Sen. Maggie Hassan (D-NH)] said.

The bill also would require the Treasury Department to monitor whether oil and gas companies are passing along the savings to consumers and encourages the department’s secretary to take enforcement actions to ensure they do.


If this bill sounds like what people generally make fun of politicians for — gimmick legislation that won’t actually solve any problems in the long run — that is because it is. Meanwhile, AAA says that prices will likely rise even higher, given that supply is outstripping demand. This situation may get worse as we approach peak driving season, or the warmer months of April through September.

According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks decreased by 1.6 million bbl to 248.4 million bbl last week. On the other hand, gasoline demand increased from 8.23 million b/d to 9.13 million b/d. A decrease in total stocks and an increase in demand have contributed to upward pressure on pump prices, but rising crude prices continue to play a dominant role in pushing pump prices higher. Pump prices will likely continue to follow suit as demand grows and stocks decrease if crude prices continue to climb.

AAA adds that the situation with Ukraine and Russia isn’t helping things, because Russia produces a lot of oil, and uncertainty tends to raise prices. Might the price of gas eventually change Americans’ minds about preferring big trucks and SUVs? Will anything?