Why Are Gasoline Prices Still High?

While differences in gasoline prices across states are driven largely by transportation costs and taxes, changes in gasoline prices nationwide are primarily driven by crude oil prices.

Because crude oil is traded in a global market, swings in its price impact every state similarly.  From February to March the average U.S. gasoline price rose from $2.91 to $3.64 per gallon, with crude oil accounting for roughly 76% of the increase.

The retail cost (price at the pump) typically lags changes in crude oil because oil must first be transported (by ship and pipeline), refined, transported (again) and delivered to retailers, who price fuel based largely on wholesale replacement costs rather than the spot price of crude oil.

Consequently, although crude oil price have mostly returned to pre-war levels, gasoline prices remain elevated but slowly drifting lower.

If tensions in the Middle East continue to ease it is reasonable to expect the price at the pump to continue trending downward.