UNC Charlotte expert discusses the factors driving up gas prices
Summertime road trips are more expensive this year as families across the country absorb the cost of increased prices at the pumps. In North Carolina, prices are up but still sit below the national average.
Matthew Metzgar, clinical professor of economics at UNC Charlotte, shared his expertise on why gas prices have increased, why costs vary in different states and what people can do to save money on fuel this summer.
What are the biggest factors driving gas prices in the U.S. right now?
The single largest driver of gasoline prices is always the cost of crude oil, which typically accounts for 50% to 60% of the price of a gallon of gas. Right now, global crude prices are elevated due to persistent geopolitical tensions in the Middle East and ongoing supply cuts from OPEC+. Additionally, seasonal factors play a massive role; summer always brings higher prices because of increased travel and the federal requirement to use a more expensive, cleaner-burning “summer-blend” gasoline.
When consumers see prices increase at the pump, what is usually happening behind the scenes?
When you see a sudden jump at your local Charlotte gas station, there are structural reasons for this:
- Wholesale cost shifts: Gas station owners buy fuel based on “spot market” replacement costs. If oil prices jump today, the cost to refill the station’s underground tanks tomorrow goes up. Station owners adjust prices immediately to ensure they have enough cash flow to buy their next shipment.
- Refinery maintenance or outages: Refining capacity in the U.S. operates tightly. If a major refinery on the Gulf Coast goes down for unplanned maintenance or gets threatened by a hurricane, regional supply drops instantly, driving up costs before the fuel even leaves the facility.
Are current gas prices primarily a supply issue, a demand issue or a combination?
It is a combination of both, but currently, supply-side constraints are carrying slightly more weight. While summer demand is predictably high as Americans take vacations, global supply is intentionally tight due to OPEC+ production caps and global conflicts. Essentially, demand is stable and high, but supply is restricted, which keeps upward pressure on prices.
How do higher fuel costs ripple through the economy beyond transportation?
Fuel is the lifeblood of supply chains, so the impact stretches far beyond your personal commute:
- Grocery and goods inflation: Almost everything you buy is delivered by a diesel-powered semi-truck or a cargo ship. When diesel and gas prices soar, shipping companies pass those costs on to retailers via fuel surcharges. Consequently, prices rise on grocery shelves, at clothing stores and for online deliveries.
- Reduced discretionary spending: When households have to spend $20 or $30 more per tank to fill up, that is money directly extracted from the local economy. People spend less at Charlotte restaurants, breweries, entertainment venues and retail shops.
How do North Carolina gas prices compare with the national average?
Right now, drivers in North Carolina are getting a bit of a break compared with the rest of the country.
- The comparison: The national average for a gallon of regular unleaded is hovering around $3.79, while North Carolina’s state average is noticeably lower at roughly $3.49. Here in Charlotte, prices are tracking right along with the state average at about $3.48.
Are there factors unique to North Carolina that influence fuel prices?
North Carolina does not have its own oil refineries. We rely almost entirely on the Colonial Pipeline, which pumps refined fuel straight up from the Gulf Coast. Because we are geographically close to the start of this pipeline, our transportation and distribution costs for fuel are much lower than states in the Northeast or Midwest.
Are electric vehicles beginning to have a meaningful effect on gasoline demand?
Yes, but it is a gradual erosion rather than a sudden drop. While EV and hybrid adoption is growing steadily—especially in urban hubs like Charlotte and Raleigh—the vast majority of vehicles on North Carolina roads are still internal combustion engines. EVs are currently capping the growth of global oil demand, but they haven’t yet reduced overall demand enough to force gas prices down significantly at the local pump.
If you could give North Carolina consumers one piece of advice about navigating fuel costs in the months ahead, what would it be?
If you want to protect your wallet in the months ahead, the best piece of advice is to use technology to shop around. Gas prices can vary quite a bit between stations just a few blocks apart (often because stations right off major highways like I-77 or I-85 charge a premium for convenience). Before you fill up, spend 30 seconds checking free apps like GasBuddy or Waze to find the cheapest fuel along your daily route. Compounding that by utilizing grocery store fuel rewards (like Harris Teeter or Food Lion) or wholesale club pumps (Costco/Sam’s Club) can save you hundreds of dollars over the course of the summer.
Written by: Jason Vaughan