NEW YORK — Fuel costs proceed to inch up and have now reached traditionally excessive ranges, with the nationwide common for a gallon sitting at $5, up practically $2 from final yr.
CBS2’s Jessica Moore explains what’s fueling the surge on the pump and what the White Home is attempting to do about it.
The price of gasoline is changing into a significant downside for drivers throughout the nation, however Moore questioned how many individuals truly know why the price of gas is so excessive.
Some say provide and demand, inflation, the struggle in Ukraine, and taxes, however AAA spokesperson Robert Sinclair says there’s one actual concrete cause.
“Definitely, it is crude oil, and crude oil is a globally priced commodity,” Sinclair stated.
He added there are 4 major contributors to the value of gasoline, together with taxes, distribution and advertising, and refining, however about two-thirds of what you pay comes all the way down to the value of crude oil, which is up 70 p.c from final yr.
“Russia was and is a significant producer, so you’re taking 10 p.c off the market and immediately all people is scrambling,” Sinclair stated.
Refineries make up the subsequent largest price suck. There are extra refineries in Southern states, the place gasoline tends to be cheaper. Out West, Californians sometimes get hit the toughest, as a result of there are fewer refineries.
“In California, you must drive and that makes gasoline extra priceless and with fewer refineries gasoline is costlier,” Sinclair stated.
President Joe Biden is now calling on oil refineries to extend provide. In a letter to the nation’s seven main refineries, the president additionally slammed their excessive revenue margins, saying massive oil corporations ought to make much less to be able to assist the American folks save a bit of bit.
“The quantity of revenue being taken is astonishing. Oil and gasoline corporations had document income in first quarter — 225 p.c over first quarter of final yr. In March, the value per barrel of oil was about $120 per barrel, like it’s right this moment, however in March we had been paying about $4.25 per gallon, so there’s a 75-cent improve. What’s going on there?” U.S. Vitality Secretary Jennifer Granholm stated.
The U.S. is the most important producer of crude oil, which begs the query: why are we nonetheless paying a lot?
“It’s as a result of that oil is traded on a world market. So, right this moment the value of oil per barrel is about $120. Individuals are paying that in nations all around the world,” Granholm stated.
The president has directed Granholm to carry an emergency assembly with oil producers to strategize methods to assist convey costs down. A few methods the White Home is contemplating are boosting oil manufacturing and refinery capability, and likewise by convincing gasoline corporations to restrict their very own income within the quick time period for the nice of the nation.
The White Home has been releasing about 1 million barrels of oil from the strategic petroleum reserve day by day to attempt to curb costs.