Pain at the pump: Gas prices are hitting record highs

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Inflation is hitting almost everything (except chicken wings, interestingly), but the one item that many track most closely is gasoline.

The bad news is that average gasoline prices in the US have hit a record high in May, at $4.59 per gallon, which is up 52% on this time last year. If you live in California you're probably wishing you were paying $4.59 a gallon — average prices there are close to $6 a gallon.

When does this end?

Crude oil itself makes up around 60% of the cost of a gallon of gas, with the rest made up of refining, distribution / marketing costs and taxes according to the EIA. Unfortunately crude oil prices are still up at $115 / barrel, way up on $60-80 range they traded at for much of last year. So gas prices aren't likely to budge lower until oil does — and even if oil was suddenly $70 / barrel gas prices would likely take their time to come down thanks to a phenomenon known as "rockets and feathers".

Rockets and feathers

The "rockets and feathers" analogy refers to the phenomenon that when oil prices rise, gas prices jump like a rocket... but when oil prices subsequently fall, they fall like a feather. Some suggest the downward delay is opportunistic, others argue that gas stations are further along in the supply chain and that there's a delay... either way it could mean high gas prices stick around a little longer.

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Pain at the pump: Gas prices are hitting record highs
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