Rising gas prices have motorists wondering: what gives?
A fifth of the world’s oil supply continues to make its way through the Strait of Hormuz in the Persian Gulf. But the fear that Iran may attempt to block that checkpoint has sent crude prices up sharply.
Demand for oil and petroleum has also increased for industries, which are buying now as a hedge on the future, said Charles Chiccheti, energy economist.
“And various companies that depend upon oil such as aviation, trucking and railroads are buying it now before it gets even more expensive,” Chiccheti said.
The Iranian government’s decision to cut oil exports has also increased the price per barrel, and what is called the spare capacity of oil is half of what it was last year.
Standard for this time of year, some refineries that supply California have gone off-line for maintenance to get ready for increased production in the summer months.
But an unexpected fire at a refinery in Washington state cut back production even further, and that has also cut supply to the state.
On top of that, California, unlike any other state, doubles its taxes on gasoline. A sales tax is tacked on to the road tax, which accounts for about 40 cents a gallon at the current price.