The Exxon gas station on Capitol Hill has prices for gas on March 14. The price of gasoline has gone up across the globe and in the United States due to the Russian invasion of Ukraine. The photo was taken by Win McNamee.
The price of crude oil quickly rose above $120 a barrel after the invasion of Ukraine and the sanctions on Russian oil. Since bottoming out in April 2020, gasoline prices have been climbing rapidly.
The average retail gasoline price for the week ending March 14, 2022, was $4.41 a gallon. That was the highest weekly average ever reported by the EIA. The highest weekly average was reported in July of 2008 when crude oil prices reached $150 a barrel.
The national average has fallen to about $4.20/gal as oil prices have fallen back to $100/bbl. It seems likely that the price of gasoline has peaked for the time being.
That doesn't mean we will see a lot of relief soon. The summer blends are more expensive. These blends are supposed to have lower vapor pressure to help reduce the formation of smog in the summer. Summer gasoline is more expensive to produce and the supply of ingredients is less than for winter gasoline.
peak driving season coincides with this all. In the summer, we rarely see significant drops in the price of gasoline. If Russia withdraws from Ukraine in the near future and the sanctions on Russian oil are dropped, this could happen.
The situation looks a lot better in the long term. U.S. oil production is increasing. In the past week, U.S. oil production increased by 1 million barrels per day from a year ago and by 600,000 barrels per day from January. The U.S. will return to record levels of oil production if we can maintain that pace for another year.
The number of rigs drilling for oil is up from a year ago. It is the highest level of drilling since the Covid-19 outbreak took hold in the U.S.
These signs point to the likelihood of lower gasoline prices later this year. You will probably have to wait until after the summer.
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