How high can Americans expect to see the average price of a gallon of gasoline in the United States rise?
The specific answer to that question depends on a lot of factors, but the one that matters most in the current geopolitical climate is the price of crude oil. That price was already rising for American consumers because of President Biden's environmental policies that have constrained the production and supply of oil and gas in the U.S. But now, with the added factor of Russia's invasion of Ukraine in the developing geopolitical environment, crude oil prices are soaring because many expect economic sanctions being enacted against Russia will be expanded to include its oil exports.
That's significant because Russia is the third largest producer of crude oil in the world, following the U.S. and Saudi Arabia. Reducing the supply of crude oil in much of the world by what Russia currently supplies to it without any change in demand would be expected to cause prices to rise, which is exactly how oil prices have behaved.
Knowing that then, we're updating the math behind a tool we first presented in 2012, which answered the question: "Where Are U.S. Gas Prices Going?", which we've adjusted to account for today's slightly higher average state and local gas taxes. To use the tool, you only need to enter the price of Brent crude oil into it, which if you're accessing our site directly, appears in the upper right corner of this article (via Oil-Price.Net)! [If you're accessing this article from a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.]
Our default value of $118.11 represents the price of Brent crude oil at the end of trading on 4 March 2022, which corresponds to an average U.S. price of $3.85 per gallon, which is very close what AAA reported for the national average price for a gallon of gasoline on this date. Depending on where you live, you'll want to consider how state and local fuel taxes affect the price you pay at the pump, which can add quite a lot to the price you pay per gallon.
That said, even with that adjustment, the tool's results won't give you a perfect match. That's largely because of volatility in the price of Brent crude oil. Frequent fluctuations in the market price for a barrel of Brent crude oil makes it difficult to pin down the exact average price for a gallon of gas at the pump. Regardless, our tool will put you close to the right ballpark for determining what you can expect to pay on average for a gallon of gas. Whether the price of crude oil drops to $50 or rockets to $200 per barrel, it will give you a good idea of how much you'll pay for each gallon of petrol at the pump.
So go ahead, take our tool for a test drive to see what kind of price you can expect to pay at the pump using your best guess of what crude oil prices will be in the future. Or just do it using the latest "live" Brent oil price, because in our fast moving world, it's already noticeably different from what it was when we drafted this edition of the tool.
Image Credit: Photo by Dawn McDonald on Unsplash.
Labels: gas prices, personal finance, tool
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
ironman at politicalcalculations
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