Rising Gasoline Prices

Gasoline prices are above $3 per gallon across the United States, and upwards of $5-$6 per gallon in western states, including Nevada and California. The price of fuel has raised spending for many Americans, making it harder to survive financially and forcing some to cut spending in other areas. What is driving the fuel price change, and what can you, as a consumer, do to save money at the pump?

Components Influencing Fuel Costs

Increased fuel costs are due to a variety of reasons, foremost being a reduction in supply and an increase in demand. Oil companies see a lack of incentive to invest in drilling due to the current federal government’s push for renewable energy and electric cars, and the discouragement of domestic oil and natural gas production. During the Fall season, there is also planned refinery maintenance and refinery outages. Additionally, as recent headlines tell us, OPEC is cutting back on oil production, and sanctions on Russia imposed because of the Russia-Ukraine war have also reduced supply and increased prices. In addition to these supply issues, demand for gasoline has risen due to an increase in consumer auto travel over the past year, with the ending of the pandemic.

Aside from the cost of crude oil, the price of gasoline is also impacted by federal, state, and local taxes, refining costs and profits, and distribution and marketing costs and profits. Refining costs vary throughout the United States, as do distribution and marketing costs, in part because of the gasoline formulations necessary to reduce air pollution in certain areas of the country, and the locations of fuel station.

Consumer Goods Price Increases

Higher fuel prices trickle down to the consumer as added costs in many areas of the economy. Costs are driven up for transportation, shipping, air travel, agriculture, logistics, and the production of certain commodities. Higher costs for truck fuel and jet fuel result in increases in consumer food costs at the grocery store. And ocean, surface, and air cargo rates are also higher as a result of  sanctions imposed due to the Russia-Ukraine war.

Saving Money on Gasoline

There are a few ways to save money at the pump. Gas apps, that you can download on your mobile devices, can help you locate the lowest-priced gas near you. In addition, some apps offer reward programs that can bring you greater savings at the pump. Enrolling in gasoline chain reward programs, such as Shell or Exxon, is another option to save money. Such programs enable a consumer to accumulate points with each fill-up that can be redeemed for discounts on later fuel purchases. Grocery chains also give members a chance to save on gas, with points given for in-store purchases that can be redeemed for discounts at the pump. Lastly, reward credit cards are yet another option to reap fuel savings. Gas is a popular category for consumers to earn cash back, as much as 5% on every $1 spent, via a reward credit card.