ATLANTA — Russia’s invasion of Ukraine has impacted our wallets, but there are many factors that determine what you pay for gasoline.
The biggest impact is the price of crude oil. Gasoline and other petroleum products begin as crude. The gas you put into your tank may have been refined from crude taken from U.S. soil or another country. There’s no way for you to know.
“Once the oil is on the world market, the price is going to be affected,” said Dr. Ray Hill of Emory University’s Goizuetea Business School.
To fully understand why the price of gasoline goes up and down, you have to begin with the factors that influence the price of crude — something consumer Jeremy Lowe understands.
“They (barrels of crude) have to be processed, they have to be shipped,” said Lowe. “A lot of things go into the final product.”
The U.S. Energy Information Administration lists seven key factors that influence the price of crude oil.
World events like Russia’s invasion of Ukraine are factors.
There’s supply and demand, but it goes beyond what’s happening in your neighborhood. Oil companies sell to the world.
“Russian oil is going to get on the world market,” said Hill. “The oil we didn’t buy is now going to go somewhere else. It doesn't matter where the Texas producers are selling oil. It doesn't matter where Russia sells its oil. That all affects the world market.”
According to the Energy Information Administration, trading on the financial markets will influence the price of a barrel of crude.
Oil companies will adjust how much crude they produce depending on the price they can get.
Hill points to 2014, when the cost of crude went above $100 a barrel. Shifts in production brought the price back below $100, but it took a while for Americans to feel the change at the pump.
“U.S. production starting to come into the market, drove it down,” said Hill. “Within a year, we were back down into normal levels.
The cost of refining crude oil into gasoline can influence what we pay. The cost can change throughout the year as refiners shift from one blend of gasoline to another.