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By Laura Sanicola
(Reuters) - The United States uses more gasoline than any other nation in the world, and lately Americans have grown concerned about the swift rise in costs at the pump.
The White House on Tuesday announced plans to release millions of barrels of oil from strategic reserves in coordination with other nations in hopes of lowering costs.
The average retail price of gasoline was most recently at $3.40 for a regular gallon, up from roughly $2.11 at this time a year ago. The swift increase - 61% over 12 months - has alarmed consumers.
A projected 48.3 million people are expected to hit the roads over Thanksgiving, according to the American Automobile Association, nearly 4 million more than last year, though still short of 2019 levels.
HAVE GASOLINE PRICES EVER BEEN THIS HIGH?
Yes. The cost of a gallon of regular gasoline hit $4.11 in July 2008. The current cost is still substantially lower than that, but a rise this swift is rare.
WHAT IS THE DIFFERENCE BETWEEN WHOLESALE FUTURES AND RETAIL GASOLINE PRICES?
President Joe Biden, in his remarks on releasing oil from the strategic reserve, said prices should be about 25 cents lower than they are now.
He is referring to the current gap between unfinished gasoline futures known as RBOB, and retail prices, that has widened out as RBOB has fallen over the last several weeks while the retail cost has remained relatively steady.
In the last six weeks, that gap has widened from roughly 78 cents to about $1.14 a gallon, the highest since April 2020. That's notably wider than the five-year average of about 85 cents.
Wholesale prices often diverge from retail prices when the former drops sharply, as retailers generally respond to such changes on a lag. In March 2020, the gap widened to $1.64 a gallon as wholesale prices crashed as the coronavirus pandemic worsened while Saudi Arabia and Russia were flooding the market with barrels. It did not return to a more normal spread for two months.
In November 2018 the gap rose to $1.11, and took several months to decline.
Title: GRAPHIC: The gap between retail and wholesale gasoline costs, https://tmsnrt.rs/3cnndYE
WHAT GOES INTO THE PRICE OF GASOLINE?
There are several factors. Crude oil accounts for more than half of the cost, according to the U.S. Energy Department. That price is largely determined by supply and demand worldwide.
Consumers pay additional costs for blending ethanol and other additives, as well as for distribution and marketing. Those costs have risen significantly, according to Tom Kloza, global head of energy analysis at the Oil Price Information Service (OPIS).