August 17, 2023
Have you been noticing it?
Yes – gas prices are going up.
But why?
Good question. I’ll tell you the answer in a second, but first I want to thank my TikTok subscribers for voting for this story as the bonus this week. If you want to vote too the only way you can do that is to subscribe to my page during my next live event.
So what’s happening with these gas prices – well, it’s complicated. And anyone who tells you one single thing is causing this — doesn’t understand how gasoline and oil works. So if you really want to understand the total picture of what’s happening – I’m going to tell you in this video. But I really want you to watch the whole thing. So if you’re not in a place to do that right now – I get it. Save it, favorite it, and come back to it when you have a little time.
Here we go. First – let’s talk about the actual gas prices.
The national average for a gallon of regular gas according to triple-a has hit the highest level in 10 months. $3.88. Now before you start screaming in the comments – that number is fake and doesn’t match what you see in your neighborhood. Take a breath. It’s entirely possible that gas is more expensive in your area. But listen to what I just said – the national average. That means AAA looked at the price for a gallon of regular gas at literally every gas station, in every state in the United States, did the math and found the average cost. That number is $3.88.
But yes – if you look at the map of the United States, you can see in the west coast, Illinois, Florida and the north east – the average cost for a gallon of regular is more. But if you look at the southwest, southeast and the Midwest the average price for a gallon of regular is less than $3.88. Ok now that we are clear on what “national average” means – let’s move on to the rest of the facts.
$3.88 is 31 cents more for per gallon than it was just one month ago. That’s an 8% jump in 30 days. Now it’s still less than it was this time last year when the average price for a gallon of regular was $3.94
So what’s causing the increase?
There are a few things.
First — oil prices have jumped this summer. The price of crude oil accounts for about half of what we pay for a gallon of gas.
At the time I am recording this video, the cost oil is $80.13 cents a barrel. Which is less than last week when a barrel cost $83.71 (Aug. 11), but still a lot more than it was at the end of May when it was $68 (May 31 $68.09). Just for comparison, today’s cost for a barrel is down a lot from this time last year when it was more than $97 (August 29, 2022 $97.01).
Why are those oil prices popping up?
I told you in several videos a few months ago that Russia and OPEC+ have drastically cut oil production and supply. In fact the most recent production *cut of 1 million barrels a day went into effect in July. And that wasn’t the only huge cut this year and it may not be the last. Cuts like that reduce the amount of usable oil on the global oil market. And even though the United States does not get its oil from Russia, oil is a global commodity and if there is disruption or supply reductions in one part of the world it impacts the entire world.
By now you’re probably thinking – why aren’t we pumping oil in America. We are! According to the US Energy Information Administration, you can see how us crude oil production has ramped up. At the last reading in May of 2023 we were pumping 12.6 million barrels of oil a day which is almost the same amount of oil as we were pumping at the peak in November of 2019 when we were pumping 13 million barrels a day.
But there’s something else worth noting when it comes to u-s oil companies. Record. Profits. US oil company profits have been astronomical in the last year. In 2022 they all hit records and in totality the big oil companies Exxon Mobile, Shell and Chevron raked in more than $135 billion dollars in one year. This year – it’s true their costs are higher because as I just showed you they have been cranking up production in 2023 –but at the same time they are also raining money on shareholders with dividends and buybacks. And when all that money is going out – the US oil companies say it gets harder to keep investing in new and more oil production in the United States.
There’s one last key factor in these price increases to point out — the largest oil refinery in the Midwest is dealing with maintenance issues right now and all of the refineries are struggling with operations in the extreme heat we’ve been seeing this summer. Not to mention — we are still in the summer driving season. Gas prices usually increase during the summer time because more people are on the road and because summer blends of gasoline are more expensive.
AAA gas prices here.
US Energy Information Administration crude oil production here
Oil Market prices here.
