Why do gas prices fluctuate so much?

Gasoline across America is always a huge topic of discussion. In fact, 64% of Americans drive their combustion engine cars daily. Gas can be more expensive in some areas and less in others, depending on where you are. So, what exactly causes these fluctuating prices?

Gas prices are primarily impacted by crude oil prices and supply and demand. In Maryland, gas prices tend to be higher in the summer and holidays because more people are traveling. The heat is another reason prices tend to be higher during the summer. Excessive heat can cause production caps. In addition, summer also brings storms, especially in the south, where most of the refineries are located. If there is damage or a power outage, production is halted, and prices skyrocket (insufficient supply to meet demand).

Unrest in the Middle East is another reason that prices can change. The Middle East is where a significant source of US oil comes from. Right now, there is a war between Israel and Hamas in Gaza. This could send oil prices up as much as 75%. This drastic change could affect many Americans and send us into a deep recession. Prices have already increased due to the war in Ukraine for similar reasons. The conflict in the Middle East is a regular occurrence at this point, so gas prices being affected by them is expected. We still can’t predict how it will affect the prices. Sometimes, the conflict can be horrible but not directly affect gas prices. For example, a country in the Middle East declaring war can indirectly affect the gas in America, primarily because of the stress it puts on the infrastructure of that particular country.

Gas prices also vary from state to state. Most notably, California is known for having above-average gas prices, but Arizona next door is much lower. Various factors can impact the price of gasoline across different states, including supply chains, local business costs, and taxes. Taxes, in particular, is why California tends to be so high. Gas tax in California is $0.57 per gallon, while next door Arizona is only $0.19 per gallon. California, however, does not have the highest gas tax in the country. That goes to Pennsylvania at $0.58 per gallon. The lowest is Alaska at $0.09 per gallon.

Cleaner energy regulations have also impacted gas prices in some states, meaning gas stations might have to pay more in some states to burn cleaner fuel. California has strict requirements for what kinds of gasoline can be sold in the state. Because of this, the state has to import a lot of Middle Eastern gas, which causes prices to increase dramatically.

Another drastic aspect of gas prices changing was in 1996 when leaded gasoline was phased entirely out of American society. This was due to health complications with lead, but it’s much more expensive to sell unleaded gasoline. In fact, according to the New York Times, unleaded gasoline traditionally costs 3 to 10 cents more at the pump. This price change increases over time and is why gas has been more expensive in recent decades.

In conclusion, while there is no one reason that gas prices change, it is helpful to know the conditions on which gas prices fluctuate. That way, one can be better informed and prepared on what to expect at the pump.