Gas prices continue to climb to record highs. So far, most of the blame has been on low oil supply. But some analysts are saying, the real problem is low refining capacity.

Another week, another record high for gas prices. And there seems to be no immediate relief in sight. 

The average price for regular unleaded gas surged by a quarter in the past week to a record $4.86 on Monday, AAA said. That’s up 59 cents more than a month ago, and $1.81 more than a year ago. 

The big culprit of course is the soaring price of crude oil, up $16 a barrel in the last month to $119, for benchmark West Texas Intermediate.

But the oil price alone doesn’t explain why gas is so much more expensive now than it was in March, when crude oil first spiked higher than $130 per barrel following Russia’s invasion of Ukraine.

Basic supply and demand is an important factor. Developed world inventories are now at seven-year lows of 2.6 billion barrels of oil and petroleum products, 300 million below the five-year average.

Gas inventories in the U.S. have sunk from 246 million barrels at the end of February to 219 million barrels last week, according to the Energy Information Administration.

With refineries and oil companies pumping at maximum capacity, there’s precious little supply cushion to meet rampant demand for fuels, paired with the loss of millions of barrels per day of Russian supplies due to sanctions

Why is gas so expensive?

The ongoing war in Ukraine is an obvious factor. The price of gas is inextricably linked to the cost of crude oil, from which it’s refined from. Every $10 increase in the cost of a barrel of crude adds almost a quarter to the price of a gallon of gas.

Even though the US doesn’t import much crude from Russia, oil is traded on a global market, and any change affects prices all over the world. The cost of a barrel of oil is nearing $120, according to AAA, almost double what it was in August 2021, as demand swiftly outpaces a global supply restricted by the US ban on Russian oil imports. 

We have always emphasized the importance of having a good website for your company because it can act as your best tool for marketing and sales. A poorly designed website can repulse people from your business and can cause you to lose customers before you even have them. Get in touch with HyperEffects to work on creating, enhancing, and making the website of your company more user-friendly.