U.S. gas prices kicked off the new year by hitting a two-year high average of $2.34 per gallon, according to the American Automobile Association (AAA).
AAA found the average American is currently paying five cents more per gallon of gas than last week, 18 cents per gallon than last month, and 34 cents per gallon more than last year.
Rising gas prices are driven by the Organization of Petroleum Exporting Countries’ (OPEC) recent decision to cut production, AAA concluded.
The U.S.’s cheapest gas can be found in South Carolina and Arizona, which pay an average of only $2.10 and $2.12, respectively. The most expensive American gas is located in Hawaii and California, which pay an average of $3.01 and $2.76, respectively.
Last January, the average American paid less than $2.00 a gallon for gasoline due to cheap energy provided by hydraulic fracturing, or fracking.
In January of 2016, the national average gas price was $1.99 per gallon, the cheapest since March 25, 2009. In 2015, consumers paid an annual average gasoline price of $2.40 per gallon. U.S. consumers spent $370 billion on gasoline in 2014, meaning a 28 percent price drop in gas is equivalent to a $102 billion tax cut for the country. American households likely saved $700 to $750 at the pump in 2015, according to analysis by the Energy Information Administration (EIA).
[dcquiz] Experts generally agree that today’s relatively cheap gas prices are due to inexpensive oil and cheap natural gas-fired electricity provided by fracking and horizontal drilling. The Obama administration has repeatedly taken legal action against the practice of fracking, but conversely claimed credit for cheaper gasoline at the pump. President Barack Obama took credit for $2 dollar gas in his 2015 State Of The Union address.
Energy prices dropped 41 percent over the course of 2015 due to fracking. Other commodities fell in price as well, but not nearly as much as energy, according to the EIA.
Most analysts agree that low prices at the pump are also enormously beneficial to American households, which tend to use cash not spent on gasoline to save more or pay down debt. While other analysts claim that the extra money is spent on luxury goods, such as eating out at restaurants. Cheap gasoline, however, disproportionately helps poorer families and other lower-income groups because fuel costs eat up a larger share of their more limited earnings.
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