Average fuel prices in 2022 passed $5 per gallon in 13 states for the first time since 2018, and more could join the list in the new few weeks.
Key Takeaways:
- Microchip shortages continue to impact the auto industry
- Gas prices are near all-time highs
- Numerous reasons exist for these high prices
- Decreases aren’t likely anytime soon because of the supply-demand imbalance
- Car-shipping services could help long-distance travelers minimize the impact of gas prices
Americans are paying record-high prices at the pump in July, a trend that isn’t showing signs of slowing down anytime soon. A number of reasons, including Russia’s incursion into Ukraine, low output from domestic oil companies, and growing demand due to a rebound in travel, are driving fuel prices up. It appears no short-term remedy will ease the problem.
Let’s look at why gas prices are soaring and a short-term reprieve is unlikely, and how a car-shipping service might help you prepare for long-distance travel this summer.
Why are fuel prices 2022 so high?
Russia is among the top oil exporters in the world. In December last year, it shipped 8 million barrels of oil and other petroleum products, including 5 million barrels of crude oil. A small percentage of the oil went to the United States; 60% went to Europe and 20% to China. Oil prices are tied to global commodity markets. Any loss of Russian oil was bound to affect global oil prices.
Fearing that oil prices would surge above $150 per barrel, Western countries initially exempted Russian oil and gas from a raft of sanctions meant to punish Russia for its invasion of Ukraine. However, in March, the U.S. announced a ban on Russian oil.
The EU followed suit, banning imports of Russian oil, which account for two-thirds of oil exported to the EU. The concerted effort to cripple Russia’s oil industry and remove it from global markets has adversely effected fuel prices.
China’s easing restrictions
In 2020, surging Covid-19 cases and strict lockdown rules in China triggered record-low oil prices. The zero-Covid approach to the pandemic slowed down the demand for oil. Crude oil traded at negative prices at some points. However, as infections fell, restrictions were eased and lockdowns lifted in major cities like Beijing and Shanghai. High demand for oil without a corresponding increase in supply drove up prices at the pump.
Less oil and gas from oil-exporting countries
To shore up prices amid a period of low demand, OPEC and other oil-producing countries agreed to slash oil production. However, when demand grew, they kept production volumes low.
With people worried about soaring oil prices, the Biden administration has pursued more drilling. However, it takes time to scale up oil production, particularly when oil companies are experiencing the same supply-chain and hiring challenges that have hit other U.S. firms.
Strong demand for petrol
Covid-19 restrictions, Russian incursion and low oil production are part of the equation. Growing demand for oil is also to blame. Though demand is yet to reach pre-pandemic levels, it’s still strong.
Record job growth in 2021 and workers’ return to offices has driven demand for oil. However, those who intend to return to the office are likely to still work from home at least some of the time, which has reduced commuting.
Summer travel, which typically kicks off on Memorial Day weekend, is partly to blame for the jump in gas prices — and the cost of jet fuel, as millions of Americans take to the skies. Airlines are reporting strong bookings this summer that have soared above pre-Covid levels.
Is a short-term decrease likely?
The simple answer is no. Experts believe we are yet to see the end of rising fuel prices in 2022. U.S. oil stocks lagged for more than two years; oil-company executives would rather improve share prices than boost oil production.
Last month, President Biden agreed to a three-month nationwide gas-tax holiday. New York, Maryland, Georgia, and Florida have temporarily suspended state gas taxes, and 20 other states are considering similar initiatives. Biden urged oil firms to work together with his administration to increase oil production and address inventory and price issues.
Previously, his administration criticized oil companies for sitting on 12 million acres of federal land approved for drilling and making little use of the 9,000 drilling permits. Oil companies were warned they could be fined for unused leases.
The White House authorized the release of one million barrels of oil from the country’s strategic petroleum reserve in March, a move that lowered gas prices to between 10 and 35 cents a gallon. While Biden’s administration hoped the release would drive demand, experts saw it as having minimal impact on supply.
Want to avoid high prices at the pump? Ship with us
You may think it’s expensive to ship your next car from state to state. But, once you add the fuel cost for long-distance travel, hotel accommodations, and other expenses, you may still spend about the same amount.
When will fuel prices go down in 2022? Those with long-distance summer travel plans will pay over a dollar more per gallon than they did last year However, you can avoid high fuel prices by hiring a car-shipping service like Mercury Auto Transport. A reliable car-shipping service can save money on transport expenses. You’ll avoid maintenance costs and repairs before and during the long trip, including the potentially high cost of a breakdown.
Also, driving a car cross-country could require take time off work. With our service, you won’t miss days in the office or lose wages.
For 15 years, Mercury Auto Transport has helped car buyers by connecting them with affordable carriers and ensuring cars arrive on time. Whether you’re moving multiple vehicles or traveling more than 500 miles, we’ve got your back. Contact us to schedule a consultation with our shipping experts.
