Missouri gas prices rose 50% in past year, highest cost per gallon since summer of 2018

Missouri

KANSAS CITY, Mo. — The American Automobile Association (AAA) data shows Missouri gas prices rose by 51% in a single year.

In August 2020, Missouri’s gas prices averaged about $1.90. A year later, the state’s average gas price steadily increased to $2.87.

This is the highest amount residents paid for gas since June 2018 when prices hit nearly $2.66.

“Coming out of the pandemic, and as the demand and the economy has rebounded, we’re just seeing such an influx of demand for gasoline so quickly,” said Nick Chabarria, public affairs specialist at Automobile Club of Missouri.

“Prices are always going to fluctuate no matter what, but everything seems to, certainly, be exacerbated by the pandemic last year.”

In January 2021, Missouri’s gas prices averaged $2.07. Eight months later, the average gas price increased by about 32.3%.

National data from AAA reports roughly a 35.7% increase in average gas prices this year, from an average of about $2.35 in January to nearly $3.19 as of Aug. 9. 

Experts say predicting this spike was challenging.

“Last year, nobody could’ve predicted the pandemic,” said Matthew French, expert in retail gasoline, product prices, and diesel prices at U.S. Energy Information Administration. “So, last year was really, really hard to forecast.”

The U.S. Energy Information Administration (EIA) attributed the rise in gas prices to an increase in crude oil prices and wholesale gasoline margins, according to a March 2021 press release.

Data taken from the EIA reveals crude oil prices have steadily increased since mid-March, when the U.S. declared a second state of emergency following the start of the COVID-19 pandemic. 

“The increase of crude oil and gasoline from COVID era to post-COVID era, that increase has been pretty big,” French said. “The demand was really low. During the pandemic, producers decreased production. It takes time to sort of ramp production back up.”

Chabarria said crude oil prices escalated in response to the news of COVID-19 vaccine rollouts and lifted restrictions, causing gasoline demand to take off.

“When there’s increased demand [for gasoline], we know that the price of crude oil also rises,” he said.

Furthermore, an announcement by the Organization of Petroleum Exporting Countries (OPEC) and partnering countries (OPEC+) that oil production would be limited in 2021 enhanced competing markets, according to the EIA.

“We’ve been forecasting for crude [oil] production to ramp back up,” French said. “OPEC started to bring more [oil] barrels back into the market. That put some downward pressure on crude oil prices. That’s one of the reasons why we expect the price of gasoline to go down.”

As of now, Missouri’s average gas prices are 10.1% less expensive than the national average. While the national average is currently 32 cents higher than Missouri, the state has seen a 2.4% greater difference in gas costs, compared to the national average costs, since January.

“Missouri currently has the fifth cheapest statewide average in the country,” Chabarria said. “Missouri consistently ranks within the top 10 cheapest in the country, but the thing to remember when you’re looking at comparing statewide averages around the country is that it’s all relative.”

According to an article published on the EIA’s website, estimated U.S. average gasoline margins increased between November 2020 and February 2021, from an average of 18 cents per gallon to 33 cents per gallon in just four months. 

In Missouri, average gasoline margins increased by about 52 cents during this time, from roughly $1.77 in November to about $2.29 in February.

Chabarria said Missouri’s prices have gone up, but so has every other state’s.

“It’s tough,” he said. “People are used to paying what they pay at home, you know, where they live. It’s tough to sell them on the idea that it still could be worse elsewhere in the country, as far as the price of gasoline goes.”

As crude oil prices and wholesale gasoline margins fluctuate, prices at the pump imitate. Experts say they are hopeful gasoline prices will decrease nationwide during the winter.

“Typically, demand goes down as we head toward the winter months. The winter [gasoline] blend is a little bit cheaper to produce,” Chabarria said. “So, we’re expecting prices to really continue to stay where they’re at, but hopefully, level off and maybe even see a slight decline as we head into the fall and into the winter.”

But a new state gasoline tax increase law suggests the increase is far from over for Missouri residents.

This month, Gov. Mike Parson signed into law the first fuel tax raise in decades. The decision will gradually raise Missouri’s 17-cents-per-gallon gas tax by 12.5 cents over the next five years, with the choice for buyers to receive a refund if they keep track of their receipts.

The money will be used to fund Missouri roads and bridges.

Chabarria said the best thing consumers can do is plan and implement fuel saving practices.

“Driving with the windows down will use less gas, even at highway speeds,” he said. “Running your air compressor, parking in the shade, parking in the garage, using your cruise control, refraining from braking and accelerating frequently – it can all help you save.”

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