If you're wondering why gas prices seem persistently elevated, the answer involves a complex web of global crude oil markets, refining capacity, government taxes, and geopolitical risk premiums that have fundamentally shifted since 2022.
The Crude Oil Factor
Crude oil is the single largest component of gasoline cost. When Brent crude trades above $60 per barrel, retail gas prices in the U.S. typically exceed $3.00/gallon. OPEC+ production management has kept crude prices elevated by restricting supply growth even as demand has recovered post-pandemic.
Refining Bottlenecks
Global refining capacity has tightened since 2020, with several refineries permanently closed. The remaining facilities operate at high utilization rates, leaving little spare capacity to absorb demand spikes or unplanned outages. When a major refinery goes offline for maintenance or weather-related shutdowns, regional gas prices can spike 10-20% within days.
Geopolitical Risk Premium
Ongoing conflicts near critical oil transit chokepoints — the Strait of Hormuz, Red Sea, and Suez Canal — add a risk premium to global crude prices that flows directly through to pump prices. Sanctions on Russian and Iranian oil further constrain available supply.