Economics, fuel, and travel experts predict gas prices will go down more substantially toward the end of 2022 when travel demands decrease.
Robert Forsyth's family business operates 81 convenience stores primarily in the Midwest, including Wisconsin. He said the high cost of fuel is hurting them, too.
“We know gas prices are not popular with consumers, nor are they popular with fuel retailers," Forsyth said. “When customers get finished paying shockingly high prices to fill their tank, and they don’t have much money left for discretionary spending, they are apt to spend less money in our stores.”
Forsyth said fuel retailers make more on items inside the store than on gas: He said 58% of convenience store profits are from products purchased inside.
Until the oil industry is able to ramp up production, fuel retailers may see fewer customers spending money in stores.
"The U.S. consumer is not being deterred by these high prices, or as much as expected, therefore the U.S. production hasn’t rebounded as quickly as the U.S. demand for refined products," Forsyth said.
Nick Jarmusz, AAA director of public affairs, said a decrease in demand for traveling is one piece of the puzzle that would help prices go down in the long run.
“Demand peaks in the summer when people are out on their road trips and utilizing a lot more gas than they are during the fall, spring and winter," Jarmusz said. "So once we get on the other side of summer, we’ll see a pullback in demand and that’ll create some relief as well.”
Demand needs to go down, but supply also needs to go up.
Jarmusz said ending the war in Ukraine would help. Western sanctions on Russia, which provides about 10% of the global oil supply, pushed fuel prices up around the world.
“Having that end would certainly provide some pretty significant relief, possibly as much a dollar, over the course of that unraveling and kind of undoing the damage that has caused to the global oil market," Jarmusz said.
When a barrel of oil increases by $1, a gallon of gasoline goes up about 2.5 cents per gallon, Forsyth explained. If oil jumps $10 per barrel, that means gas prices increase by 25 cents per gallon.
The COVID-19 pandemic also played a role in why we're seeing high gas prices.
Moses Altsech, a UW-Madison School of Business professor, said the U.S. significantly reduced its supply of oil during the pandemic when demand for travel was low. He said suppliers weren't prepared for how quickly the economy rebounded.
While OPEC is working to increase production, Altsech said it's not something that can happen immediately.
“I compare it to turning an aircraft carrier rather than turning a speed boat," Altsech said. "So even though that’s in the works, there’s a process that we have to go through and it’s not a short-term solution.”
Some states are temporarily suspending fuel taxes to provide some immediate relief to the high costs at the pump, including Connecticut, Georgia, Florida, and New York.
Wisconsin has a state gas tax, which is 30.9 cents per gallon. Wisconsinites also pay a federal gas tax of 18.4 cents per gallon. Gov. Tony Evers, (D) Wisconsin, previously called on federal lawmakers to put a pause on the federal gas tax.
While Altsech said suspending the gas tax would benefit consumers, he said we likely won't see long-term relief from high gas prices until the end of the year when supply and demand level out.
“Most analysts agree that inflation has already peaked, and the cost of oil contributes to that a well," Altsech said. "So that doesn’t mean it’s going to plummet. It’s going to very gradually decline. But at least it’s moving in the direction we want it to.”