Are Gas Prices Rising Again?
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• Updated Feb. 21, 2023, 9:10 a.m. PT to reflect the most recent average fuel prices in the United States.
The average regular gas price in the U.S. as of Feb. 21 is $3.40 per gallon, according to AAA, which tracks gas prices .
It's cheaper than some of the prices we saw in 2022. Still, while the price of gas has risen slightly in recent weeks, it's at least temporarily leveled off. The average cost of a regular gallon of gas is virtually the same as it was one month ago, according to AAA data.
Compared with peak gas prices, the current average represents a roughly 32% decline since June 2022, when the average was $5.006 per gallon, according to data from the U.S. Energy Information Administration, or EIA. So while gas prices have risen over the last month, they're still well below their 2022 peak.
When you look further back and compare current costs with prices at the same time last year — mid-February 2022 — it's now about 13 cents cheaper, AAA data shows.
Why are gas prices down from their 2022 peak?
Spot shortages can drive up gas prices locally because of refinery or pipeline shutdowns, blending issues or even gouging. But big, nationwide swings in the price of gasoline are almost always due to the price of crude oil.
The cost of raw crude oil typically represents more than half of the cost of a gallon of gasoline, according to data from the U.S. Energy Information Administration (EIA). Refining, distribution and taxes account for the remainder.
The price of benchmark West Texas Intermediate crude oil has fallen from more than $115 a barrel in summer 2022 to about $76.34 today, according to the EIA . That's a decline of about a third. Gasoline prices have declined about the same amount.
Over time, the price of crude oil and the price of gasoline move with supply and demand. Many factors affect both. Recession, pandemic and higher prices tend to tamp down demand; war, collaboration among oil states and tax incentives can limit supply.
Gas prices at the pump rarely reflect that day’s market conditions; instead they represent costs incurred weeks, even months before. That lag makes prices slower to rise and slower to fall than news headlines might suggest.
Where is the highest gas price in the U.S.?
Drivers in the states below are seeing the highest average gas prices per gallon, according to AAA data on Feb. 21 :
Hawaii: $4.880
California: $4.738
Nevada: $4.221
Washington: $4.195
Colorado: $4.102
» MORE: Easy ways to save money on gas
Where are gas prices the lowest?
Drivers in the following states are seeing the lowest average gas prices per gallon as of Feb. 21, according to AAA data:
Texas: $2.993
Mississippi: $3.007
Kentucky: $3.040
Missouri: $3.054
South Carolina: $3.056
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How do gas prices work?
The price of gas is determined by a complex set of factors that are at work long before the gas gets to your local station.
Gas prices tend to correlate with consumer sentiment about the overall economy — as gas prices go up, confidence levels with the economic conditions of the country go down, according to research by the Mercatus Center at George Mason University in Virginia .
Here’s what you need to know about how gas prices work :
There are four types of fuel available at the pump that will differ in price. The three non-diesel types of gasoline — regular, midgrade and premium — are categorized by octane rating, a measure of fuel stability (the pressure at which a fuel will combust in an engine).
Regular: The least expensive.
Midgrade or super: More expensive than regular but cheaper than premium and diesel.
Premium or super premium: Most expensive non-diesel gasoline.
Diesel, also known as distillate fuel oil, is used in vehicles that have diesel engines, such as freight trucks and buses. It’s the most expensive type of fuel on the retail market.
The cost of gasoline at your local station depends on multiple costs and profits including :
Why is diesel so expensive?
Diesel fuel is so expensive right now for several reasons: high demand, high production costs, and higher federal taxes than regular gasoline.
Demand for diesel remains relatively high in the United States, China, India and throughout Europe, according to the U.S. Energy Information Administration. And since Russia’s invasion of Ukraine in February 2022, the United States has banned the import of Russian oil and petroleum products, which includes diesel.
Russia is one of the world’s biggest oil producers. In 2021, roughly 8% of all U.S. petroleum imports were from Russia, according to the EIA. So, removing Russia from the supply chain naturally dwindles supply.
And in 2014, the Environmental Protection Agency imposed regulations that dramatically reduced the amount of sulfur permitted in diesel fuel. Before, diesel’s sulfur content was limited to 500 parts per million. After 2014, that figure was reduced to just 15 parts per million — a 97% decrease in sulfur content. These regulations greatly benefit the environment, but raise the cost of producing diesel fuel.
Finally, the U.S. government taxes diesel at a higher rate than regular gasoline. Diesel fuel is subject to a 24.3 cent per gallon excise tax, whereas regular gasoline’s excise tax is 18.3 cents per gallon, according to the U.S. Energy Information Administration.
Does the president control gas prices?
The president doesn't set the gas prices you pay at the pump. When prices go up, don’t blame the president. Conversely, when prices go down, don’t thank the president.
The White House is often held responsible for gasoline prices, but the administration rarely has effective tools to move the needle one way or the other. Supply and demand for oil is the culprit.
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