Falling Oil Prices Put the Brakes on Surging Pump Prices for Now

AAA

PORTLAND, Ore., – After cresting above $123 per barrel shortly after Russia’s invasion of Ukraine, the price of crude oil has gradually fallen below $100 per barrel. If this trend holds, it may reduce some of the extreme upward price pressure consumers have found at the pumps, but not all. Prices continue to climb in 49 states, but the increases are not as dramatic as they were last week. For the week, the national average for regular adds 14 cents to $4.32. The Oregon average jumps 15 cents to $4.74.

Last week the national average shot up 54 cents while the Oregon average jumped 55 cents. Both averages are slightly lower than their record highs set last week. The national average peaked at $4.33 on March 11 while the Oregon average peaked at $4.739 on March 11. These prices eclipse the old record highs set in 2008 when the national average peaked at $4.11 on July 17, and the Oregon average peaked at $4.29 on July 3.

“The violent invasion of Ukraine by Russia continues to impact an already tight global crude oil market, making it impossible to predict if pump prices have peaked or will surge again. It all depends on the direction of oil prices,” says Marie Dodds, public affairs director for AAA Oregon/Idaho.

On average, about 53% of what we pay for in a gallon of gasoline is for the price of crude oil,12% is refining, 21% is distribution, and marketing, and 15% taxes, according to the U.S. Energy Information Administration.

About 3% of oil, and a total of 8% of oil and refined products used in the U.S. last year came from Russia, while about 25% of Europe’s oil is imported from Russia. The U.S. is the largest oil producer in the world. Other top producers are Saudi Arabia and Russia.

U.S. gasoline demand rose slightly from 8.74 million b/d to 8.96 million b/d. Total domestic gasoline stocks decreased by 1.4 million bbl to 244.6 million bbl last week, according to the U.S. Energy Information Administration (EIA). The increase in gas demand and a reduction in total supply contribute to rising pump prices. But increasing oil prices play the lead role in pushing gas prices higher.