The pain for consumers and truck drivers continues at the fuel pump. The average price of both regular gas and diesel fuel hit record highs this week and show no sign of slowing.
According to AAA, the national average price of regular gas is $4.40 a gallon, while the average price of diesel is $5.55 a gallon. One reason for the surge is the high price of oil, which is a result of the shortage caused by the loss of Russian petroleum from the market.
When refiners receive a barrel of oil, they can choose to produce gasoline or diesel fuel. With fewer COVID-19 cases manifesting than in previous months, consumers are driving more and using more gasoline. However, the trucking industry's demand for fuel has never been higher due to supply chain backlogs.
Benjamin Dierker, director of Public Policy at the Alliance for Innovation and Infrastructure, says gasoline and diesel fuel are different markets competing for the same barrel of oil. He said refineries often respond to “market signals” to determine whether to produce more gas or diesel fuel. Lately, the market has signaled a need for more diesel fuel.
“Falling inventory and high demand for distillates in the supply chain and for air travel are spiking diesel costs,” Dierker told ConsumerAffairs.
‘Kink in the hose’
So with less available oil, refiners have to choose between producing gasoline or diesel fuel. Patrick DeHaan, head of petroleum analysis at GasBuddy, says there’s an additional problem: The nation’s oil refineries aren’t producing as much of either fuel.
“Refining is the kink in the hose, and we're down 1 million barrels a day of refining capacity vs early 2019,” he wrote on Twitter.
Fuel prices were already fairly high before Russia invaded Ukraine earlier this year, provoking international sanctions. But since the invasion, gasoline prices have risen another 25%.
If consumers can take any consolation, today’s record-high pump prices aren’t really a record when adjusted for inflation. The U.S. Energy Information Administration reports that the 2008 high of $4.11 a gallon is actually $5.30 in today’s money.