Why are gas prices increasing? How people answer this can depend on their political leanings, but it all boils down to supply and demand. On the supply side, Saudi Arabia, one of the biggest oil producers, cut their production by a million barrels of oil a day earlier this summer. This was followed by OPEC, which is an organization of leading oil producing nations, cutting production by 1.6 million barrels a day in an effort to raise prices.
And why are some states SO much more expensive than others? If we look at California, a good portion of it is due to various taxes and fees. In CA, about $1.20 of every gallon goes to excise taxes when it’s only an average of $0.20 per gallon for other states. California also mandates a cleaner-burning gasoline, which is more expensive to produce and more limited in supply since most refineries don’t produce it.
Will gas prices keep going up? Who knows. Like most things in the future, it’s impossible to predict. But rather than focusing on that, focus on what is in your control. Find ways to increase your income. And invest as much of it as you can in low cost index funds.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane
