Gas Prices Up and Chip Shortage – Explained

By Lauren Fix, The Car Coach

Gas experts say crazy high prices at the pump are going to continue into the winter. Typically, a dip in gas prices is expected this time of the year, but with high demand and short supply, prices will stay where they are this holiday season at may increase as travels hit the road for the holidays. Add this to the lack of car production and the chip shortage, and we are looking at some massive increases in prices on everything we use every day.

I’ll explain.

The cost of crude oil is the most significant factor in the retail price of gasoline. The cost of crude oil as a share of the retail gasoline price varies over time and across the country. US crude oil prices are determined by global fundamentals, including supply and demand, inventories, seasonality, financial market, and expectations.

Taxes are added to the price of gasoline. Federal, state and local government taxes also contribute to the retail price of gasoline. The federal excise tax is 18.30¢ per gallon. As of January 1, 2019, state taxes and fees on gasoline averaged 28.31¢ per gallon. That is a significant impact on gasoline prices.

The Chip shortage has weighed on the auto industry. We keep hearing analysts push back the projection for when the concerns may ease. The chip drought will continue well into next year. From the company officials I have spoken to personally, we may not have this resolved until the end of next year.

For every car or truck that does not roll off an assembly line in Detroit, Stuttgart, or Shanghai, jobs are in jeopardy. They may be miners digging ore for steel in Finland, workers molding tires in Thailand, or Volkswagen employees in Slovakia installing instrument panels in SUVs. Their livelihoods are at the mercy of supply shortages and shipping chokeholds, forcing factories to curtail production.

The auto industry accounts for about three percent of global economic output. The percentage is much higher in car-making countries like the USA, Germany, Mexico, Japan, South Korea, or states like Michigan. A slowdown in making vehicles can leave scars in areas that take years to recover.

The shock waves from the semiconductor crisis, forcing virtually all carmakers to eliminate shifts or temporarily shut down assembly lines, could be strong enough to push some countries into recession. This translates to higher prices for you as a buyer, even though the demand for vehicles hasn’t lessened.

The Bottom Line

Supply chain disruptions are striking countless products that Americans use regularly. The long-term energy crisis, including green energy, will be constrained into the middle of winter. Most Americans are entirely dependent in one way or another on natural gas, propane, heating oil, gasoline, and other energy products to survive day-to-day. We hear from multiple outlets to be ready for higher prices that impact every person globally.

Check out these headlines:

From The Wall Street Journal: “Natural-Gas Shortage Sets Off Scramble Ahead of Winter”
From Energy Wire: “4 ways the energy crisis hits US electricity, gas, EVs”
From Forbes: “Gas Prices Climb, No Relief Before The Holidays”
From CNN Business: “Gas prices skyrocket as the global energy crisis worsens”
From Bloomberg: “Europe’s Energy Crisis Is Coming for the Rest of the World, Too”
From Reuters: “Global gas shortage helps lift prices in the United States”

A solid strategy is needed to deal with the current energy crisis. There seem to be no real solutions from our current government. We could potentially face simultaneous shortages of oil, natural gas, propane and coal, and other products we consume every day.

Watch the video review. We show you everything you need to know. If you have additional questions, put them in the comments below, and I’ll be happy to answer.

Lauren Fix, The Car Coach®, is a nationally recognized automotive expert, analyst, author, and television host.  A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and aspects, energy, industry, consumer news, and safety issues.   

Lauren is the CEO of Automotive Aspects and the Editor-in-Chief of Car Coach Reports, a global automotive news outlet. She is an automotive contributor to national and local television news shows, including Fox News, Fox Business, CNN International, The Weather Channel, Inside Edition, Local Now News, Community Digital News, and more. Lauren also co-hosts a regular show on with Paul Brian called “His Turn – Her Turn” and hosts regular radio segments on USA Radio – DayBreak. 

Lauren is honored to be inducted into the Women’s Transportation Hall of Fame and a Board Member of the Buffalo Motorcar Museum, and Juror / President for the North American Car, Utility & Truck of the Year Awards.  

Check her out on Twitter and Instagram @LaurenFix.

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