You might want to re-think that trip to the beach.
As motorists hit the road to celebrate America’s birthday they’ll be facing the highest Independence Day gas prices since the 2014 peak of $3.66 per gallon. The average gas price is hovering around $2.90 a gallon nationally with prices in some states well over $3 per gallon. It’s a far cry from last year’s 4th of July, when gas prices were at their lowest since 2015.
Here are the forces pushing up what you pay at the pump.
Demand
Gas prices tend to surge over the summer—and especially on summer holidays—as more Americans hit the road. In fact, if there’s a silver lining to the high 4th of July prices it’s that they won’t be quite as high as they were this past Memorial Day, when the national average was $2.92 per gallon. Global demand for oil has been increasing since 2015, and with the walk-back of fuel emissions goals in the U.S. and elsewhere, it’s likely to remain high.
Supply
Russia and OPEC intentionally decreased the production of crude oil in 2017, and they’ve kept supplies low into 2018. But experts say this probably isn’t the main driver of high oil prices, since Russia and OPEC only cut production by about 1% and the increase in U.S. production has more than accommodated this cut. Recent supply volatility has contributed to the 4th of July spike as well. Data from last week shows “one of the largest weekly declines in recent memory.”
Taxes
Increases in gas tax hit Oklahoma, South Carolina, Indiana, Maryland, Tennessee, Vermont, and Iowa over the weekend, just in time for the holiday. Some of these taxes are long overdue, but they’ll still cause pain at the pump.
Policy
While the Trump administration is quick to blame Russia and OPEC, its policies have not helped matters. The State Department has ordered oil buyers to stop buying from Iran by November in the wake of Trump’s renewed sanctions against Iran. The administration’s sanctions against Venezuela have not helped the global supply of oil either.
OPEC and Russia have agreed to increase in the supply of crude oil, which will help in the long run, but as the U.S. heads into hurricane season, prices aren’t likely to come down any time soon.
