Gas experts say crazy high prices at the pump are going to continue into the winter. Normally, a dip in gas prices is expected this time of the year, but with high demand and short supply, prices will stay where they are this holiday season at may increase as travels hit the road for the holidays. Add this in to the lack of car production and the chip shortage and we are looking at some massive increases in prices on everything we use every day.
I’ll explain: The cost of crude oil is the largest factor in the retail price of gasoline. The cost of crude oil as a share of the retail gasoline price varies over time and across regions of the country. U.S crude oil prices are determined by global fundamentals, including supply and demand, inventories, seasonality, financial market and expectations.
Taxes are add to the price of gasoline. Federal, state, and local government taxes also contribute to the retail price of gasoline. The federal excise tax is 18.30¢ per gallon. As of January 1, 2019, state taxes and fees on gasoline averaged 28.31¢ per gallon. That is a significant impact on gasoline prices.
Gasoline prices are also affected by the cost of other ingredients that may be blended into the gasoline, such as ethanol. The Keystone pipeline shutdown also contributes to increased fuel prices. The price at the pump also reflects local market conditions and demand.
Now to the Auto Semiconductor Chip Shortage ...
The chip shortage has, obviously, weighed heavily on the auto industry. We keep hearing analysts push back the projection for when the concerns may ease,
This is inevitably going to continue to be a problem well into next year. In fact, from the companies I spoken to personally, The U.S. automotive industry may not have this resolved until the end of 2022.
For every car or truck that does not roll off an assembly line in Detroit, Stuttgart or Shanghai, jobs are in jeopardy. They may be miners digging ore for steel in Finland, workers molding tires in Thailand, or Volkswagen employees in Slovakia installing instrument panels in SUVs. Their livelihoods are at the mercy of supply shortages and shipping chokeholds that are forcing factories to curtail production.
The auto industry accounts for about 3% of global economic output, and in car making countries like the U.S., Germany, Mexico, Japan, South Korea, or states like Michigan, the percentages are much higher. A slowdown in auto making can leave scars that take years to recover from. Look at what happened to Detroit in the 1980s, when the automotive manufacturing giants began taking their plants overseas.
The shock waves from the semiconductor crisis, which is forcing virtually all carmakers to eliminate shifts or temporarily shut down assembly lines, could be strong enough to push some countries into recession. As production is further impacted in these far reaches of the globe, this also translates to higher prices for you as a buyer, all the while consumer demand on our shores and elsewhere is not lessened.
The Bottom Line
Supply chain disruptions are striking countless products that Americans use regularly. The long-term energy crisis -- including green energy -- will have no other course of action but to continue well into the middle of this winter.
Most Americans are completely dependent, in one way or another, upon natural gas, propane, heating oil, gasoline and other energy products to survive day to day. We hear from multiple outlets, that we need to steady ourselves for higher prices that will impact every person on the globe.
A sampling of recent headlines:
The Wall Street Journal: “Natural-Gas Shortage Sets Off Scramble Ahead of Winter”
Energy Wire: “4 ways the energy crisis hits U.S. electricity, gas, EVs”
Forbes: “Gas Prices Climb, No Relief Before The Holidays”
CNN Business: “Gas prices skyrocket as the global energy crisis worsens”
Bloomberg: “Europe’s Energy Crisis Is Coming for the Rest of the World, Too”
Reuters: “Global gas shortage helps lift prices in United States”
Individuals and their families need to develop a solid strategy to deal with the energy crisis, as the leaders in our current government are not only not acknowledging the looming threat of inflation and rising energy prices, but they are also failing to provide any clarity. We could be potentially facing simultaneous shortages of oil, natural gas, propane and coal and other products we consume every day.
Watch our video review here. We show you everything you need to know. If you have additional questions, contact team members Paul Fix III or Paul Brian via social media with any question, and I'll be happy to answer.
Paul Fix III - @paulfix3 on all social media
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Lauren Fix, The Car Coach® is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.
Lauren is the National Automotive Correspondent for Newsmax TV, a conservative news net carried in 23 countries and in over 35 million U.S. cable/satellite homes. She is also The Weather Channel and Inside Edition’s auto expert. Lauren Fix serves as a juror for the esteemed North American Car & Truck of the Year Awards (NACTOY).
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