Why Is Gas So Expensive Right Now? 7 Things Driving Prices

If you are wondering why gas is so expensive right now, you are not alone. Drivers across the United States are feeling the pressure every time they fill up their tanks. As of Sept. 18, the national average for regular gasoline was around $4.46 per gallon, according to AAA. Diesel prices were even higher, reaching over $6.1 per gallon, according to GasBuddy.

To put things into perspective, for people driving large SUVs and full-size pickup trucks, filling up the tank can easily cost more than $100. So, what is causing gas prices to rise so quickly?

One of the biggest reasons is the disruption to global oil supplies caused by the ongoing conflict in the Middle East.

Why Are Gas Prices So Expensive Right Now?

1. The Middle East Conflict Is Disrupting Oil Supplies.

The conflict involving Iran has created major problems for the transportation of oil through the Strait of Hormuz, one of the world’s most important oil shipping routes. A disruption in this area can quickly affect oil prices around the world because a large amount of petroleum normally passes through the region.

2. A Recent Attack On Saudi Arabia’s East-West Pipeline Caused More Disruption.

The situation became even more serious after a Sept. 10 attack damaged Saudi Arabia’s East-West pipeline, an important alternative route that allows oil to bypass the Strait of Hormuz.

According to Fortune, the pipeline stretches about 746 miles across Saudi Arabia, carrying oil from the Persian Gulf toward the Red Sea. It was designed to provide an alternative route if shipping through the Strait of Hormuz was disrupted.

Rystad Energy revealed to the outlet that between 2.6 million and 4 million barrels of oil per day had been moving through the pipeline and out of the Red Sea port of Yanbu. The company said that the amount of oil is now at risk of “disappearing from the market.”

Four million barrels per day represents roughly 4% of global oil supply, according to the International Energy Agency.

Stress can also be seen in Brent crude oil prices, a major trading classification of light, sweet crude oil that serves as the primary global benchmark.

Janiv Shah, vice president of oil markets at Rystad Energy, said the recent increase in Brent crude prices shows that the market is already reacting to “a significant loss of supply.” He also said Saudi Arabia’s oil inventories could support exports in the short term, but that could “change quickly.”

3. Higher Oil Prices Mean Higher Gas Prices.

When crude oil becomes more expensive, drivers usually feel the impact at the gas station. Oil is the main ingredient used to produce gasoline and diesel, so higher crude oil prices can eventually push fuel prices higher. Right now, Brent crude oil is trading around $103.77 per barrel, climbing sharply as markets react to concerns about oil supplies and transportation routes.

Why Is Gas So Expensive Right Now?

4. Diesel Prices Add More Pressure.

Diesel prices are creating another problem for Americans.

Diesel is widely used by trucks, freight vehicles, trains and farm equipment. When diesel becomes more expensive, transportation costs also rise. Those higher costs can eventually affect the prices of groceries and other everyday products because businesses have to spend more money moving goods around the country. 

5. Gasoline Increases During Warmer Months, Stressing Gas Companies.

All of this can lead to pain at the pump—especially as the demand for gasoline typically increases during the warm summer months as more people travel and drive, putting additional pressure on fuel supplies, according to NACS. Usually, when the weather is hot and sunny, refineries are required to switch to more expensive summer-blend gasoline, which is designed to reduce emissions during the hotter months. This typically peaks in August, “where total fuel demand is 10% to 15% greater,” notes NACS. “Any stress to the system, such as a refinery or pipeline outage, can cause a supply/demand imbalance and affect prices,” the outlet added.

6. The Transition Into Fall & Weather Events Are Also Causing Gas Prices To Spike.

As gasoline demand begins to decline and temperatures cool, retailers can transition to winter-blend gasoline beginning Sept. 15. Although winter-blend fuel is generally less expensive to produce, the transition between seasonal fuel formulations can create temporary supply disruptions and contribute to short-term price increases.

Weather events can add another layer of uncertainty during the late summer and fall, as hurricanes and other severe storms can disrupt refinery operations, transportation, and fuel supplies, putting additional pressure on gasoline prices.