Gas prices are rising. Here's why and what drivers can expect next
Key Takeaways
- National regular gas average reached $3.88 on March 19, highest in over two years.
- Colorado's average also hit $3.88, matching the national price.
- Prices rose about $1 per gallon versus one month earlier.
Current gas price surge
Gas prices are rising.
“Gas prices are rising”
Here's why and what drivers can expect next Sticker shock is hitting drivers as gas prices surge, with many Americans paying almost $1 more per gallon than just a month ago.
The national average for regular gas climbed to $3.88 on March 19, according to AAA, its highest level in more than two years.
Colorado matched the national average at $3.88.
Oil prices set globally
The price of oil is set in the world market.
If U.S. prices stayed low and they rose elsewhere, then U.S. producers would export and chase higher prices, and importers would divert oil elsewhere.
Gasoline prices can be regional because it's expensive to transport and not everyone lives close to a refinery, but they depend ultimately on the price of oil.
Impact of Hormuz disruption
Anything that disrupts the supply for oil will cause prices to rise.
“Gas prices are rising”
Iranian supplies are directly affected, and their apparent blockade of the Strait of Hormuz makes it more expensive to transport oil out of some middle eastern countries.
A lower supply means a higher price for oil and therefore a higher price for anything refined from oil, like gasoline or jet fuel.
Risks and extreme price scenarios
I can't predict gas prices better than markets, but if the Strait of Hormuz is mined, making tanker traffic unsafe, or blockaded for a significant time, that must translate to much higher prices.
Attacks on production and distribution facilities for oil and gas will increase prices.
I have seen estimates as high as $200 per barrel or more if there is a blockade for a month, but I do not personally have expertise in these predictions.
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