(NewsNation) —It is not a good time to be an American filling up the tank at the gas pump. But it is a great time to be a crude oil driller or refiner, as profits are soaring while gas prices sit at record highs nationwide.
Many Americans who have felt their wallets get lighter at the gas pump this year have directed blame to a multitude of places for the high gas prices. President Joe Biden has received blame, stations have been accused of price gouging, and the COVID pandemic and war in Ukraine have also been saddled with blame.
But who really is responsible for those high gas prices, which topped $4.80 per gallon on average nationwide Monday?
It is not just one person or one factor leading to the eye-popping prices seen at gas stations, said Tom Kloza, the head of energy analysis for the Oil Price Information Service.
Instead, multiple factors, including — yes — the pandemic and Russian invasion of Ukraine, can be blamed. But so too can simple laws of economics such as supply and demand.
“It’s a market and it’s market-based pricing,” said Kloza, a guest Monday on NewsNation’s “Dan Abrams Live.” “There have been far more buyers than sellers globally this year, with fits and starts, but particularly since the invasion of Ukraine.”
It is a particularly profitable time to be a crude oil driller or refiner, Kloza said. Coming out of the global COVID-19 pandemic, demand for gas surged and buyers flooded the market, driving up demand. Gas stations began paying more and more for truckloads of gasoline as drillers and refiners cashed in big time on the heated demand for gas.
“To a great extent, the retailers are the messenger blamed for the message these days,” Kloza said. “The root of the high prices begins with crude (oil), then it begins with epic refinery margins. In my career, the price of gasoline has been $5 to $25 above the price of crude; this year, we’re seeing $60, $70 or $80 a barrel.”
On Tuesday, benchmark U.S. crude oil for July delivery rose 91 cents to $119.41 a barrel. Brent crude for August delivery rose $1.06 to $120.57 a barrel. Wholesale gasoline for July delivery fell 3 cents to $4.16 a gallon.
Kloza said the crude oil production and refining markets are seeing massive profits to the tune of billions, “if not trillions” of dollars passing through the market each day. Like consumers, gas stations and retailers are paying higher prices, as well.
“It’s much more profitable at the well head and at the refinery gate than it is for a station operator,” Kloza said.
But the United States is far from the only country experiencing a frustrating rise in gas prices, which Kloza said are just a reflection of “the reality of what’s happening in the world.”
“There are many, many countries when gasoline is selling for $7 to $10 a gallon,” Kloza said. “You can go to Canada and find those kind of prices.”
