Why Are Gas Prices So High?

Gas prices surged in 2021 and 2022 amid economic disruptions caused by the pandemic and Russia’s invasion of Ukraine — and they’ve never been the same. Today, gas prices are 17% higher than they were five years ago.

What’s keeping gas prices so high? Seasonal factors, supply-chain disruptions and gas tax hikes can play a role. But elevated oil prices are the main culprit.

» MORE: Does the president control gas prices?

The cost of oil typically represents more than half of the cost of a gallon of gasoline, according to data from the U.S. Energy Information Administration (EIA). So, a major reason gas prices are so high is that oil prices are still higher, on average, than they were before the pandemic and Russia’s invasion of Ukraine. That’s based on the price of West Texas Intermediate crude, which is used as the benchmark for oil prices in North America.

Keep in mind that gas prices depend on a complex set of factors and rarely reflect that day’s market conditions. Instead, they represent costs incurred weeks, even months before. That lag makes prices slower to rise and fall than news headlines might suggest. And while spot shortages, refinery production shortages or blending issues can drive up gas prices locally, big nationwide swings in gas prices are almost always due to the price of crude oil.

» MORE: 5 gas apps to get you through the price surge

Yes, gas prices have gone up

The average per-gallon price of regular gas was $2.601 in 2019, according to EIA data. Then, following Russia’s invasion of Ukraine, the national average peaked at $5.016 per gallon on June 14, 2022, according to AAA. Since then, gas prices have retreated, but they haven’t returned to pre-pandemic levels.

But they're dropping right now. Here's why

Gas prices have been dropping steadily this fall, and that trend should continue through the winter. Soon, experts expect the national average to fall below $3 per gallon for the first time since May 2021. It’s already below $3 in 31 states.

Here’s how gas prices compare today:

• The average regular gas price in the U.S. as of Dec. 12 is $3.026 per gallon, according to AAA, which tracks gas prices. 

• The price has fallen 5 cents in the past month, down from $3.078.

• The price a year ago was $3.137.

At the moment, these are short-term trends happening within the larger picture of elevated gas prices. But experts think they could continue into 2025.

“Gasoline prices are likely to be a gift to the next president, staying much lower than in previous years when COVID and Russia’s war on Ukraine caused a surge that’s unlikely to repeat,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a Nov. 4 report.

So, what’s going on? Again, oil prices are a major factor. While oil prices are still higher than they were before the pandemic, they’re trending down. WTI crude prices are down about 17% since July and about 40% since their peak in 2022.

Prices also are going down because of seasonal trends. During the cooler months, consumer demand is lower and the blend of gasoline is cheaper to make. That will help hold down prices until spring.

Average gas price per state

The average gas price per state varies widely. A gallon of regular fuel costs about $2.04 more in the state with the highest average price of gas (Hawaii) than in the state with the lowest average (Oklahoma).