The average cost for a gallon of gas in the U.S. rose last week, marking the first time prices have increased in 3 ½ months. This occurrence ends an impressive 98-day streak of declining gas prices, the second-longest such streak on record going back to 2005, according to AAA.com After hitting a record-setting high on June 14th and $5.016 per gallon, prices gradually receded before leveling off at $3.67 on September 20th,
While the reprieve customers at the pump experienced over the summer months is significant, it is still much higher than it was just last year. Despite the significant short-term reduction, gas prices are still nearly 50 cents more expensive than they were just one year ago. Now, according to CNN, the “historic streak of falling US gas prices is over.” That’s because gas prices are trending upwards, reaching $3.72 cents per gallon, a small increase but a warning sign that prices may move steadily higher above $4 per gallon in the weeks ahead.
AAA notes there are multiple factors playing into the rise in consumer fuel costs, particularly due to rising petroleum prices, which account for roughly 50 percent of the input cost for gasoline. Specifically, the organization blames rising prices on “war, COVID, economic recession, and hurricane season. All this uncertainty could push oil prices higher, likely resulting in slightly higher pump prices.”
Certainly these factors have contributed to the record highs consumers paid at the pump in June, but there are more contributing causes that AAA doesn’t mention. The Biden administration has been incredibly hostile to the use of fossil fuels and has implemented harmful regulations, shuttered the Keystone XL pipeline, raised taxes, and halted drilling of oil and natural gas on federal lands. According to data provided by the Energy Information Administration, domestic crude oil production is down sharply compared to years 2019 and 2020, a time when many considered the U.S. to be energy independent. These actions have all directly played a role in the concerning energy crisis facing the country.
Now, the federal government is winding down the release schedule of crude oil reserves, a move implemented in April by President Biden as a means to put downward pressure on fuel costs. The release of nearly 1 million barrels of oil per day is about to end, which will significantly reduce the amount of oil available on the marketplace. To prepare for this upcoming reality, refiners are expecting a sharp drop in the supply of petroleum on the market to make gasoline, thereby fueling a rise in prices.
The Biden administration described the most SPR sale as a bridge to get supply and demand in balance as domestic producers increase output. Despite the political rhetoric coming from the White House, production has not crept up to meet the broad demand for oil. Unless President Biden takes the handcuffs off the domestic fossil fuel industry, it is unlikely prices will drop below the new “low” of $3.67 per gallon.