Published March 08, 2011
The average price of regular gasoline has jumped 34 cents per gallon in just two weeks - including a penny overnight.
That's the second biggest price increase over a two-week span ever.
But the national average is now $3.52 - that's the highest it's ever been this time of year. Oil prices retreated today as OPEC discussed the possibility of ramping up oil production.
So if oil is down - how can gas be up? It's not just the price of crude oil that determines how much you pay at your local gas station. There is an array of factors.
Some station owners price their product not based on what it costs to produce, but on what it costs to replace it. Meaning station owners need to make enough money selling the gas they already have to pay for future shipments. You can imagine the impact that practice has when prices are rising.
Then there's the weather. When the temperatures rise - refiners switch from cheaper blends to more expensive ones because the warm air makes gas evaporate faster.
Bottom line: gas prices go up.
And what makes everything more expensive – taxes.
The federal tax rate for gasoline is 18 cents on the gallon - but that's not a major factor since it has been that way for nearly 20 years. But state and local governments issue their own taxes. As a result - many cross state lines just to find cheaper gas.
California and New York have the highest taxed gasoline in the country - with around 66 cents on the gallon, while New Jersey and Wyoming have some of the lowest taxes, around 32 cents.
The rising fuel costs are not just a problem at the pump, since businesses of all shapes and sizes rely on gas to ship products. They're hitting the whole economy - at a time when we can least afford it.
Experts predict the expense will have companies pulling back on hiring - which had just started to pick up. Food prices are also skyrocketing and many are blaming the most recent spike on oil.
Since the start of the recession prices are up around 78%, and due to surging costs of fuel - and other commodities such as cotton - clothing retailers are being forced to raise prices - possibly 4% this year.
So what to do?
The White House says we may tap the oil reserves... which would only supply us with enough for a few weeks.
The ban on deepwater-drilling was lifted in October, but the government only issued one permit in that time.
The solution seems simple to everyone - but the White House.