Many people assume that the price of gas always correlates with the price of oil. While it usually does, this isn’t always the case. Oil costs actually only comprise 55% of the price of gas. Distribution and taxes account for the rest. If there is a problem with distribution, that can cause an increase in the price of gas, even if the price of oil is down.
Sometimes the price of oil is much higher than gas, thanks to government regulations like we saw when gas approached $4 a gallon in 2008. While a barrel of oil was priced at over $146 in the summer of 2008, gas did not follow suit. It rose, certainly, peaking at around $4 in the summer, but didn’t follow the extreme price hike that oil saw from May to July.
Oil prices have risen as gas prices have, but oil prices saw a severe uptick in price per gallon in the middle of 2008. It seems, as well, that the price disparity between oil and gas is growing, with efforts by the U.S. government to aid Americans in bringing the price of gasoline down to a more affordable level. At the beginning of 2009, oil and gas prices were nearly synchronized, but have since widened apart. The last time oil and gas prices were in sync prior to that was late 2003 and early 2004.
What’s the future of gas prices? It’s anyone’s guess, but they are not likely to go down substantially. Looking back in history, drivers paid just $1.43 a gallon in November of 2004 and likely complained about how high gas was then. (If they only knew!) In 2006, prices averaged $2.69 a gallon and began to rise toward $3 a gallon in 2007. 2008 was by far the highest rate for gas, at $3 to $4 a gallon, but prices have come down to that 2006 level of around $2.69.
Did you know the U.S. uses 20% of the world’s oil reserves? Two-thirds of that goes to transportation. Despite us not being the most populated country in the world, we still use more gas than any other country. The U.S. imports 11.8 million barrels of oil every single day, and uses 388.6 million gallons of gas daily.
Saudi Arabia, one of the largest exporters of oil to the U.S., exports 8.7 million barrels of oil a day. Only 45% is used to make consumer gasoline.