Gas prices reach at highest point in 7 years
President Joe Biden’s administration has said it is considering releasing oil from emergency reserves, among other things, to help bring down costs as gas prices surge in the United States.
Gas prices reached a national average of $3.24 on Oct. 7, according to AAA. That’s up from $3.20 on Monday, which is a level AAA said hasn’t been seen since October 2014. An increase in demand and the high cost of crude oil, which AAA said has stayed above $73 a barrel, are likely driving the price increases at the pump.
Presidents don’t control gas prices. But the Biden administration has recently said it is looking at every tool it has to address the costs of oil, including the Strategic Petroleum Reserve and working with international partners.
Surging gas prices
The Oct. 4 national average of $3.20 for a gallon of gas is 2 cents higher than last month and $1.02 high than this time last year, according to AAA.
Patrick De Haan, an analyst at GasBuddy, tweeted that GasBuddy is showing an average of $3.26 per gallon and that the increases “won’t stop yet.” He predicted prices could hit $3.30 a gallon or more.
High demand, supply constraints and the COVID-19 pandemic are likely factoring into the increased costs.
During most of 2021, as the country recovered economically from the pandemic, higher gas prices were mostly a result of increasing demand as Americans started to go out or travel more, McClatchy News reported in June.
Last week, gasoline demand rose more than 5 percent, AAA said. But the Energy Information Administration said oil and natural gas production was lower than pre-pandemic levels. That “tightened supply” is part of the reason crude oil prices have stayed above $73 and is preventing gas prices from “taking their usual seasonal swoon.”
“Global economic uncertainty and supply chain concerns caused by the lingering COVID-19 pandemic could be playing a role in keeping crude oil prices elevated,” Andrew Gross, AAA spokesperson, said Oct. 4
What Biden’s administration is doing
White House Press Secretary Jen Psaki said last week that the administration did not have any “near-term” solutions to announce but that it is “looking at every means we have to address the cost of oil.”
She said that includes discussions with international partners — including the Organization of the Petroleum Exporting Countries, or OPEC — on “the importance of competitive markets and setting prices” and on doing more to support recovery of oil supply.
This week, OPEC, Russia and other oil suppliers announced they would stick with their deal reached in July to only increase oil production by 400,000 barrels a day in November, which is less than 0.5 percent of worldwide demand, despite pressure to ramp up production, The New York Times reported.
Psaki also said that last month, National Economic Council Director Brian Deese sent a letter Federal Trade Commission Chairperson Lina Khan asking that the FTC “use all of its available tools to monitor (the) U.S. gasoline market and address any illegal conduct that might be contributing to price increases.”
She said the FTC responded and committed to “take specific actions to identify, deter and investigate.”
On Oct. 6, U.S. Secretary of Energy Jennifer Granholm said during a Financial Times summit that “presidents don’t control the cost of gasoline” and that the “market is what the market is.”
But she said releasing oil from the Strategic Petroleum Reserve, or SPR, is a “tool that’s under consideration.”
The federally owned SPR is the “world’s largest supply of emergency crude oil” and was established to lessen the impact supply disruptions, according to the Energy Department. It is stored in underground salt caverns at four sites along the Gulf of Mexico.
“SPR oil is sold competitively when the president finds, pursuant to the conditions set forth in the Energy Policy and Conservation Act, that a sale is required,” the department said.
“Such conditions have only existed three times, most recently in June 2011 when the president directed a sale of 30 million barrels of crude oil to offset disruptions in supply due to unrest in Libya.”
The energy secretary can also “authorize limited releases in the form of exchanges with entities that are not part of the Federal Government,” it said.
De Haan tweeted Oct. 6, however, that “we would need a significant release” to bring gas prices down much.