Why Are Gas Prices So Expensive Right Now?

Over Thanksgiving weekend, gas prices in the United States hit a seven-year high. As of Monday, the national average for one gallon of regular octane gas is nearly $3.40. The most expensive states to buy gas are in New England or west of the Rocky Mountains. The highest recorded prices are in California. The result is many drivers worried about their fuel economy and wallet. Here’s why gas is so expensive right now.

California gas prices are the highest in the country

California gasoline prices are expensive right now | Chris Delmas / AFP via Getty Images
California gas prices on November 24th | Chris Delmas / AFP via Getty Images

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Historically, the relatively low U.S. gas tax, has kept fuel affordable for Americans. Mixing our gasoline with corn-based ethanol makes every gallon of our regular gasoline even cheaper. But the pandemic appears to have changed that.

Over Thanksgiving weekend gas prices surged to a record high. In parts of California, the price of a gallon of regular gas shot to over $5. Gasoline in Los Angeles reached prices as high as $5.89 for a gallon of regular gas, $6.49 for premium.

Unlike other commodities, gasoline’s short shelf life makes it impossible to stockpile: Americans who wanted to travel for the holidays had to pay the expensive gas prices.

According to The Daily Show and Business Insider, the reason gas is so expensive right now is the pandemic. The United States’ oil refinery industry nearly shut down during lockdown. Then, as Americans resume commuting and holiday travel, demand skyrocketed. With supply so limited, prices increased.

Many experts say that the oil industry shut down old wells and refineries while not establishing new ones. Therefore, ramping up production will take time. But others are suspicious of this explanation.

The real reason gasoline prices are so expensive right now

President Biden is suspicious of the supposed reason gas prices are so expensive right now | Justin Sullivan/Getty Images
Driver watching a fuel pump | Justin Sullivan/Getty Images

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Not everyone is ready to accept the standards supply and demand explanation for our current expensive gas prices. AAA predicted that the number of Thanksgiving travelers in 2021 would nearly equal pre-COVID numbers. Despite these warnings, the oil industry did not increase production to meet demand. As a result, the industry’s profits increased.

President Biden actually put the Federal Trade Commission on warning. He theorized gas companies took advantage of holiday demand to make more money. He ordered the Commission to open an investigation.

“I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct.”

President Joseph Biden

Gas prices in Canada are also expensive

Gasoline prices are at a seven year record high in Pennsylvania and California | Sean Gallup/Getty Images
Pumping gasoline | Sean Gallup/Getty Images

Like many Americans, I traveled for Thanksgiving. I was shocked to find just how expensive gas prices are right now.

According to AAA, the most expensive prices in the eastern U.S. are in Pennsylvania, hovering between $3.59 a gallon and $4.71. Average prices in much of the U.S. are lower. But in the Pacific coastal states and the Rocky Mountains, prices are as high. Washington, Oregon, Idaho, Colorado, Nevada, Arizona, Hawaii, Alaska, and California all have average prices in the same bracket as Pennsylvania.

Normally, residents of the United States are used to paying higher gasoline prices across the border in Canada. Last weekend, I was surprised to find a tank of gasoline in New England costing slightly more than in rural Canada. According to Global Petrol Prices, as of November 22nd, the average gallon of gas in Canada cost the equivalent of $4.85 US dollars. But in Canada, that would be advertised as 1.628 Canadian dollars / Liter.

If you are concerned about rising fuel prices, you can read up on how gasoline taxes stack up by state. If you choose to stock up on fuel, make sure to use a safe gasoline storage container.

RELATED: CDC Guidelines for Thanksgiving Travel