Gas prices in the United States have increased over the last few months–in part because of Russia’s invasion of Ukraine. To help better understand how global unrest can have such a profound effect on our gas tanks in America, PBS NewsHour Digital Anchor Nicole Ellis spoke with Tom Kloza, the Global Head of Energy Analysis at Dow Jones’ Oil Price Information Service.
Watch the conversation in the live player above.
Despite the average retail price of a gallon of gasoline rising by 25% in the past two months and by about 70% since President Joe Biden took office, Kloza said there’s very little a sitting president can do to change or influence the price Americans pay at the pump.
According to Kloza, the financial strain on oil companies predates the Biden administration, dating back to 2008 recession related bankruptcies, which has made investors less likely to invest in oil companies and new drilling.
“Before President Biden took office, Wall Street was burned by oil and gas companies,” Kloza said. “Wall Street, and to a certain extent the banking community, said ‘we don’t want to lend you money to drill for more oil’.”
The price of a tank of gas varies from state to state, as regional factors affect the price at the pump, including taxes and proximity to sources, according to Kloza. Californians, for example, pay an estimated extra $1.30 in taxes and carbon fees at the pump, according to Kloza. Part of those fees go to climate saving initiatives.
READ MORE: Biden bans Russian oil in the U.S. as evacuations continue in Ukraine
Kloza says that “California is really the laboratory for the rest of the country,” in legislating alternatives to fossil fuels in response to climate change, which could be adopted by other states or the nation.
“It’s not a free lunch if you want to decarbonize the world and in large segments of the population off of fossil fuel. It’s going to be expensive and it’s going to be painful.”
The time and money it takes to produce a barrel of oil also affects prices at the pump. Large domestic offshore drilling projects that could bring millions of barrels a day to the market takes time and effort that affects the ultimate price per barrel, making it more affordable to look to other nations who are able to produce oil more quickly and affordably.
Further influencing oil prices has been the ban Biden imposed on Russian oil imports to the U.S. in response to that country’s invasion of Ukraine. But Kloza points out that a ban on Russian oil is mostly symbolic in the U.S. It is, however, more impactful in Europe and China, where they depend on Russia as a supplier and pay up to 60 times more than Americans. But because oil is also globally traded, a ban on
Russian oil could lead to price increases across the world over the long term.
Gas prices may remain unpredictable as the war in Ukraine continues. For consumers hoping to save at the pump, Kloza said a change could be steering away from using premium gas and if possible, driving a smaller car that will use less gas.
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