Pump prices are setting new record highs again this week with the Oregon average climbing above $5 a gallon for the first time ever. The major driver is the high cost of crude oil which is above $110 per barrel. For the week, the national average for regular jumps 15 cents to $4.52 a gallon. The Oregon average soars 21 cents to $5.06.
The national and Oregon averages continue to set new record highs almost daily, eclipsing the recent record highs set in March.
“The high cost of oil, the key ingredient in gasoline, is driving these high pump prices for consumers, and unfortunately, there’s no relief in sight,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “Even the annual seasonal demand dip for gasoline during the lull between spring break and Memorial Day, which would normally help lower prices, is having no effect this year.”
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% distribution and marketing, and 15% are taxes, according to the U.S. Energy Information Administration.
Crude oil prices remain elevated due to the Russian invasion of Ukraine. Russia is one of the top three oil producers in the world, behind the U.S. and Saudi Arabia, and about 25% of Europe’s oil is imported from Russia. Tight global oil supplies made worse by the lack of product coming out of Russia have put upward pressure on crude prices. A year ago, crude was around $66 per barrel compared to $112 today.
Meanwhile, the switch to the more expensive summer blend of gasoline, which usually adds seven to ten cents per gallon depending on the market, is happening now. This switchover should be complete nationwide by early June. This summer blend switch is an annual event. It is unrelated to the Biden Administration’s announcement a few weeks ago to allow the higher ethanol E15 gas blend to remain on sale throughout the summer until September.
Demand for gasoline in the U.S. decreased slightly from 8.86 million b/d to 8.7 million b/d. Total domestic gasoline stocks decreased by 3.6 million bbl to 225 million bbl last week, according to the U.S. Energy Information Administration (EIA). Typically, lower demand would put downward pressure on pump prices. However, crude prices remain volatile, and as they surge, pump prices follow suit. Pump prices will likely face upward pressure as oil prices stay above $105 per barrel.