(NewsNation Now) — As the summer travel season gets underway and Memorial Day weekend motorists suffered record-high prices at the pump, several states saw a recognizable spike virtually overnight.
If you live in Michigan, Indiana, Ohio, Kentucky or in parts of Illinois, West Virginia and Florida, buckle up.
Gas prices suddenly climbed in those areas as much as 20 to 40 cents per gallon.
“It’s incredible. It’s outrageous! It shouldn’t be happening,” said one motorist filling up in St. Louis.
So why the sudden spike?
Those states practice something called “price cycling.”
Price cycling is “a very predictable behavior of prices kind of going down and then spiking all in one day,” explains Patrick De Haan, an analyst with gas tracking website GasBuddy.
“Most markets see small fluctuations passed along on a daily basis. Whereas areas that price cycle ignore those daily changes for several weeks, and then all at once pass two weeks worth of daily changes along in one fell swoop,” he told NewsNation.
Price cycling forces competition among stations, so it can be good for the consumer — but only those who get the timing right.
“It can often actually lead to lower prices. That is, it forces competition. There are much more aggressive decreases in those markets,” De Haan said. “The problem is getting the timing right. But that’s why some of the states are making a big jump up because they haven’t gone up (for) potentially several weeks. And now, because of a huge increase in the wholesale price of gasoline, we’re now at an inflection point where they basically have to pass along a big increase because they’ve ignored it for the last two weeks.”
And there’s little relief in sight, according to experts. The European Union’s ban on Russian oil and China coming out of another COVID-19 lockdown are expected to drive gas prices up even further.
The national average price per gallon of regular gas Tuesday was $4.62, according to GasBuddy.
Heading into Memorial Day weekend, the nation saw an average per gallon of regular at $4.59, the highest inflation-adjusted price since 2012.
This was an 8% increase from Memorial Day weekend 2021.
The high prices are in part because of the cost of crude oil, which has been increasing since April of 2020. Crude closed at $123.01 per barrel Friday, a nearly 3% jump from the day before.
Russia’s invasion of Ukraine and rising demand outpacing production at some refineries are also to blame.
Those sound like far-away problems for everyday Americans trying to get from A to B, but if you were one of the 38 million Americans on the nation’s roadways for the unofficial start to summer, you surely felt the pain at the pump.
“Are you going to (go) away on a trip and spend a bunch on gas? You know, some people have to choose whether they’re going to feed their family or go on a trip,” said Michelle, a motorist in St. Louis. “And I think that’s a no-brainer.”
President Joe Biden, in meeting with Federal Reserve Chair Jerome Powell, said he’s going to maintain a hands-off approach to dealing with inflation. It’s a strategy one business and tech journalist says is the right approach.
“It’s really the only option that he [Biden] has,” business and technology journalist Shibani Joshi said on Tuesday’s edition of “Rush Hour.” The Federal Reserve — the central bank — like many central banks around the world is, in fact, an independent government agency,” she continued.
“Even though former President Trump did call out the Fed and was even critical of the organization, most presidents tend to allow the Fed to do what it’s supposed to do because that is it’s mandate,” Joshi said.
Also Tuesday, Biden also had an op-ed published in the Wall Street Journal, in which he laid out a plan that attacks the “outrageous unfairness in the tax code that allows a billionaire to pay lower rates than a teacher or a firefighter.”
But Joshi told “Rush Hour” that “the best cure for inflation is solid monetary policy and that is what the Fed is charged to do.”
“When you do things like increase taxes, while yes, you’ll get more of a budget surplus, but Biden has more of an inflation problem, not a taxation problem and (additional taxation) has the potential to decrease demand and decrease the growth and rate of acceleration for the economy,” she continued.
In terms of a long-term solution, Joshi points to increasing oil production and providng more incentives for the development of alternative energy sources. All of that, she says, “will take time.”