PHOENIX — The price of oil has climbed above $90 a barrel for the first time since the summer of 2014. The most recent rise is blamed on possible supply problems stemming from the threat of a Russian invasion of Ukraine.
With gas prices already climbing in Arizona, it’s a strong indicator that the rise at the pump will not be over soon.
According to the US Energy Information Administration, crude oil makes up about 56% of the price you pay at the pump. The rest is a combination of refining, taxes, and retail marketing and distribution. The average cost of gas since 2000 in west coast states, excluding California, has ranged from $1.23 in 2002 to over $4 in 2008.
When put on a chart with the Weekly Cushing, OK WTI price for a barrel of oil, the relationship between the gas prices and oil prices becomes clear.
A Russian invasion of Ukraine could mean economic sanctions on Russia and they are the third-largest oil producer in the world behind Saudi Arabia and the United States. Germany has recently said it will reassess its use of the Russian-owned Nordstream pipeline, which could put further pressure on global oil supplies.
But there is some good news.
The US Energy Information Administration forecasts that U.S. domestic oil production will increase to record levels in 2023, putting downward pressure on the price of oil which, in turn, would put similar pressure on the price of gas Arizonans are paying at the pump.