If you drive a car, chances are you have felt the same pain drivers across Tampa Bay are experiencing: filling up costs a lot more these days.
Gas prices dropped below $2 per gallon on average last year as the pandemic ramped up, then jumped up at the end of last year. This week, average pump prices around the state skirted $3 per gallon. Mark Jenkins, spokesperson for AAA, the Auto Club Group, explains what’s going on. Responses have been edited for length and clarity.
What’s happened this week?
Things are changing pretty quickly, as in just (in) the past few hours the oil market has turned downward pretty significantly (as of Monday). Crude oil prices dropped this morning on concerns about the Delta variant and how that could slow economic recovery from the pandemic. The price of crude (oil) dropped last week — that was more about (the Organization of the Petroleum Exporting Countries’) plans to start increasing production levels. Last week you could say that crude prices began declining due to expectations that supplies would grow. Today, they’re declining on concerns that demand would slip.
What does crude oil have to do with what people pay at the pump?
Gasoline is refined from crude oil. If the price of crude is higher, then that raises the cost of producing gasoline (which trickles down to the pump).
Is the volatility in pricing we’re seeing unusual?
The (price) increase is more than we’ve seen in recent years, but not significantly more. So far this year, the price of gasoline has increased about 80 cents (per gallon). In 2019, we saw gas prices increase about 68 cents from the lowest price to the highest price. In 2018, we saw gas prices increase 76 cents. I think what especially stands out for drivers is that prices have gone so high after being extremely low last year.
When pump prices are as low as they were last year, I think people forget about the reason they were low. In this particular case, pump prices (were low) because we were in a pandemic and demand had plummeted as people were staying home. That was the same around the world. There was a surplus of crude oil, and that caused prices to plummet, but then as a result countries had to reduce their crude output levels not knowing when that demand was going to come back. Now demand is roaring back and that’s leaving a lot of countries in a position where they have not been able to ramp up production right back up to where we were before.
What do you expect over the next few months?
Usually what we tend to see in a normal year would be gas prices fluctuate through the summer and begin declining through the fall and winter months after the summer driving season is over. Usually they’re highest in the spring. Right now, things are so unusual with global supply and demand. If anything, it’s a very tight market right now with concerns in the fuel market about this Delta variant that’s caused crude prices to suddenly drop. I think that’s relatively unexpected. (In the short term), given today’s moves in the price of crude, there’s a good chance we could see some relief at the pump assuming these crude oil price drops hold for a week or two. Gas prices rise like a rocket and fall like a feather.