Darryl Sample watched the gas meter tick steadily upward as he filled his Mercedes sedan at a Chevron in East Anchorage on Thursday.
“I have about a quarter of a tank — I only have about nine gallons at $50,” he said. “It’s hitting me in my wallet more so than what I would prefer.”
Gas prices in Anchorage have jumped from a little over $3 a gallon to more than $5 in the last year. At the Chevron Thursday, a gallon of regular unleaded was $5.50. The Anchorage Daily News reported prices upward of $10 in rural communities last month.
Sample said it’s changed how he thinks about driving these days.
“I would have been more frequently visiting friends or taking more trips, whether it be to the store or to somewhere that I can enjoy in Anchorage or outside of it,” he said.
A few stalls over, Sam Campbell filled up his Toyota pickup truck, which was towing a skiff on a trailer. He said the jump in gas prices means he’ll be fishing closer to home this year.
“Pretty much all the rivers out of Southcentral I probably won’t travel to this year, where I otherwise would have. Between filling the truck and filling the boat, it’s pretty expensive to go very far,” he said.
Longtime oil industry observer Larry Persily said the recent spike can be ascribed to the Russian invasion of Ukraine, which threw uncertainty into the market and lowered the supply of crude oil, as countries around the world moved to ban Russian oil.
“It’s tightened the supply and made people nervous, made markets nervous, and that drives prices higher,” Persily said.
But prices were increasing even before the war, and Persily said that’s because of long-term production snags caused by the COVID-19 pandemic. Refining capacity dropped in the U.S. over the last few years, and it hasn’t caught up to this summer’s increased demand.
“We just don’t have the ability in this country to make as much fuel. We just don’t have as many refineries pumping out as many barrels,” Persily said. “So high oil prices, constrained supply from refineries, growing demand. It’s just expensive for gasoline.”
The high price of gas, diesel and jet fuel are also driving inflation, Persily said, because those extra costs get passed down the supply chain all the way to the groceries and other goods you buy at the store.
So what brings prices back down? Persily said it’s a straightforward combination of decreased consumption and increased supply.
“Russia stopping its war on Ukraine and coming back into the good graces of the rest of the world and selling its oil. That could lower prices,” he said.
Or other global suppliers could ramp up production. Any solution, Persily noted, will take time.
In the meantime, federal data shows gas prices may have increased to a point that consumer demand has actually gone down. Demand for gas nationwide is down roughly 5% from last summer.
Sample, at the Chevron, said he’s not worried about how he’ll manage if prices stay high.
“No, I got a bike. I’m determined not to let this beat me. I can get more exercise and lose more weight and manage my travel.”
Sample placed the pump back on its cradle. He only filled half a tank, which he said he’ll try to stretch as long as he can.