According to the U.S. Energy Information Administration (EIA), the official summer driving season lasts from April through September. Unofficially, the season began in earnest after the Memorial Day weekend, when millions of Americans are unleashed upon the open road in their summer driving endeavors.
Gasoline consumption typically peaks during the summer months, and according to the EIA, consumers will be paying a bit more at the gas pump this summer driving season. The average national price for a gallon of regular gas is expected to be $2.92, up slightly from last summer’s average of $2.85.
There are vast differences in gas prices across our 50 states. The main driver of this variance is taxes. On average, about $0.53 in state and federal taxes is added to the price of each gallon of gas. Motorists in Illinois pay the 10th-highest gas taxes in the nation at $0.55. Iowa’s gas taxes ($0.49) rank No. 23.
According to the American Automobile Association, the average price for a gallon of regular gasoline in the U.S. is $2.82. Mississippi has the lowest average price at $2.42, while California has the highest at $3.98. Locally, Iowa ranks No. 18 ($2.67) and Illinois ranks No. 42 ($2.99). If you’re planning a trip to Chicago, you’ll pay extra. The average price for gas in the Windy City is a hefty $3.44.
Gasoline prices are primarily driven by the price of crude oil. As the price of crude oil rises, so do its many distillate products — kerosene, heating oil, jet fuel and yes, gasoline. In fact, for each $1 increase in the price of a barrel of crude oil, the price for a gallon of gas rises 2.4 cents.
West Texas Intermediate (WTI) is the benchmark grade of crude oil produced in the U.S. In October 2018, WTI reached $76/barrel, a near 4-year high. Much of the global rise in oil prices falls on the efforts of the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut production. OPEC is a 14-nation oil cartel, led by its de facto lead Saudi Arabia, that produces 30% of the world’s crude oil. Global oil prices have since retreated, and WTI is currently trading around $56/barrel. For 2019, WTI is expected to average around $63/barrel.
To reduce its reliance on OPEC’s price manipulation, the U.S. crude oil industry has transformed itself into a global juggernaut. Spawned by the exploration of America’s shale oil fields, which contain some of the world’s largest untapped deposits of crude oil, U.S. production has surged more than 40% over the past two years. In September 2018, the U.S. surpassed both Russia and Saudi Arabia to become the world’s largest producer of crude oil. In May, U.S. crude oil production reached 12.3 million barrels per day, a new all-time high. Production is expected to increase to 13.4 million barrels per day in 2020.
Though the U.S is the world’s largest producer of crude oil, it is also the largest consumer, accounting for 20% of the world’s consumption. But crude oil is a global commodity, subject to global forces of supply and demand. Unfortunately for consumers, crude oil prices — and thus gasoline prices — can be quite volatile.
For Americans, there’s an inherent frustration with the near-whimsical nature of gas prices. Adding to that discontent, much of our financial strain from rising gas prices is derived from a foreign source — primarily, OPEC, Russia and their allies.