U.S. natural gas prices are surging, with the benchmark futures contract rising to a 13-year high of $8.74 per million British thermal units, at a time when that fuel’s price tends to dip due to lack of demand in the spring.
But analysts say a number of factors have combined to boost the cost of gas, which has risen about 90% since the beginning of March.
Drivers in 2022 face an increasingly painful experience every time they fill up their gas tanks. National-average regular unleaded gas prices sit at $4.23 per gallon as of this writing – up 2% from $4.13 just a week ago, up 29% from $3.28 at the start of the year and 45% higher than the $2.91 national average a year ago.
Among oil-producing nations, Russia ranks behind only the U.S. and Saudi Arabia, supplying roughly 10% of the world’s oil needs. Western sanctions have cut off some of that supply, more sanctions targeting Moscow’s oil sales may be coming, and many western energy companies are voluntarily shunning Russian oil.
All this has sent crude oil prices above $100 per barrel, which in turn pushed the average price of regular gas well above $4 per gallon this spring.
AAA reports prices are up 4 cents since Monday to $4.16 for a gallon of regular gasoline. The fluctuating oil prices and tight gas supply are to blame for this most recent spike in prices, according to AAA. The group expects the cost of gas to keep increasing as oil prices stay above $100 per barrel.
Over the last week, Delaware has seen the largest price increase at more than 20 cents per gallon. Maryland, Ohio, Indiana, Michigan, and Florida have also seen big jumps.
In recent weeks, we saw gas prices drop some 20 cents after hitting a high of $4.33 per gallon in the middle of March. It was the highest-ever recorded average price. However, it may not hold that record for long according to Tom Kloza, global head of energy analysis at the Oil Price Information Service. He told CNN, “The market is still scary.”
Even though President Joe Biden ordered on March 31 the release of up to 180 million barrels of oil from the country’s emergency reserves within the next six months in an effort to help lower costs, global oil prices continue to climb.
High prices and lingering supply constraints pushed GDP down this past quarter by 1.4% – after a year and a half of growth.
Despite some predictions of a looming downturn, President Biden insisted Thursday the underlying economy is strong.
U.S. crude oil costs $102.54 per barrel, while Brent crude, the international standard, costs $105.49 as of Tuesday, according to the U.S. Energy Information Administration. Prices could continue to rise as well, as the European Union is planning to ban Russian oil. For reference, when gas prices were at their highest, U.S. crude oil and Brent crude were around $125 and $130 a barrel, respectively.
Democratic leaders announced a new bill Thursday that would give the Federal Trade Commission the power to investigate the way energy companies set prices.
Energy analyst Helima Croft said there are several factors driving gas prices up, including Russia’s invasion of Ukraine.
“The question is the duration of the war. We had a market, an oil market that was already fairly tight in terms of supply and demand at the start of the year. We had optimism about recovery from COVID, people were driving to work,” she said.
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