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Why are gas prices soaring? Reasons varied but impact is tangible

Posted at 5:13 PM, Mar 09, 2022
and last updated 2022-03-09 19:18:11-05

DENVER — What’s driving the cost of gasoline to record levels? While the reasons are varied and sometimes difficult to pin down, the impacts are tangible.

What are current gas prices in the Denver area?

The average price of regular gasoline across the Denver area is $3.91 per gallon as of Wednesday, according to GasBuddy, which is a 9 cents increase from the day before and more than a 14% increase from a few weeks ago. The lowest price in the Denver area is $3.59 as of Wednesday.

The average price for gasoline in the US is also hitting record levels. As of Wednesday, the average price is $4.25 per gallon, which is an increase of 8 cents from the previous day.

Why are gas prices skyrocketing?

Several factors are in play, according to experts. One of the latest ones is the US ban on Russian oil imports announced Tuesday. The US historically gets around 4% of its oil from Russia. Other factors contributing to the price increase include:

  • Seasonal price changes
  • Increase in demand for oil
  • Reduction in total supply due in part to the coronavirus pandemic
  • Skyrocketing oil prices

What are the impacts?

The increase in gas will continue to drive up inflation on all goods and services that rely on gasoline and crude oil, further squeezing consumers, businesses, financial markets and the global economy.

Other impacts locally include delivery drivers and gig workers, those who drive for Uber and Lyft, who are making less per mile as they end up paying more to fill up.

"I gotta go from one place to another and end up spending a lot of gas just trying to drive to places, and it adds up," said Luke Mauer, a delivery driver for Cosmo’s Pizza. "If gas prices go higher, it's going to be a real issue."

What are people doing?

According to a recent AAA survey, Americans said they are driving less, combining trips, and using rewards programs to save on fuel costs.

Commuters in Colorado are feeling the pain at the pump.

"I drive around for work all the time. So it's starting to definitely impact," said Mimi Wong, a commuter in Denver. "It's not good. So they have got to do something about it for sure. But meantime, you just got to keep going."

What is being done?

OPEC is sticking with its plan for just a modest production increase. The oil alliance chose to increase production by 400,000 barrels per day in April. But the key, according to some economists, is expanding drilling here in the United States.

"Fortunately, we have plenty of energy resources in this country, we just have to access it," said Sanjai Bhagat, a professor of finance at CU Boulder. "The international oil price being high does give the incentive to some of the oil producers both in Colorado and nationally."