Gas Prices are Skyrocketing: Here’s Everything You Need to Know

Updated as of March 14, 2022

Gas prices are now the most expensive in U.S. history

Consumers are going to be paying a lot more at the pump than usual, as rising oil costs continue to ramp up prices at gas stations across the country. 

San Francisco became the first city with an average gas price of more than $5 per gallon, an increase of over 30% in one year. 

According to AAA, the national average price for regular gasoline hit $4.325 a gallon, surpassing the previous record of $4.114 reached in July 2008.

Source: AAA

Prices are soaring due to the economic effects of Russia’s invasion of Ukraine. Russia is the world's second top producer of crude oil and supplies about a third of Europe's needs. Crude oil accounts for 56% of what Americans pay at the pump, according to the Energy Information Administration. That’s why higher oil prices often translate to higher gas prices.

Keep reading to learn about what goes into gas prices and how this will affect your Upside offers.

How are gas prices determined?

Gas stations purchase gasoline from wholesalers at a price that changes daily — so the price they paid last week may not be the price they paid yesterday. Then, gas stations set the price you pay based on what they paid per gallon, plus a small markup so they can profit.  

When the wholesale price for gas increases, gas stations either need to raise their sign prices or deal with lower margins. Stations often wait as long as they can before they raise prices, because they could potentially lose customers to nearby gas stations with a lower price. When wholesale gas prices go up (like they are right now), gas stations make less profit. And that means there’s less they can offer to you in the form of offers or promotions.

The week of March 7, stations weren't able to increase their sign prices by nearly enough to make up for the rises in cost. As the chart below illustrates, average station margins for regular grade fuel sharply declined from the beginning of the month, going from $0.28 per gallon on March 1 to just $0.04 on March 7.

During that same period, sign prices also increased—but not by enough to protect stations’ profit margins. This is due to the fact that the wholesale price paid by stations for fuel (the green line below) has gone up sharply. So even with higher sign prices, stations weren’t able to keep up with rising costs.

Stations in every part of the country have been feeling the pressure. We see from the map below that last week margins sharply declined in every state, with some states—including Florida, Arizona, and Ohio—running negative margins, losing money on every gallon of gas they sold.


Then over the last week the market has begun to stabilize and wholesale prices have come down, so gas stations’ margins are going back up.

How does this affect Upside offers?

Gas stations themselves fund the cash back offers you see in the Upside app. Even when gas stations were losing money with each fill up (March 4-7), stations on Upside continued to do what they could to provide users with cash back. Now as margins rebound and there’s even more to give, Upside offers increase, too.

Upside has always been about the win-win-win: people earn cash back, businesses earn profit, and communities thrive. When outside factors disrupt that cycle, our app automatically adjusts. As gas prices stabilize and stations return to business-as-usual, you’ll see more of the high cash back offers you know and love.

Of course we know that inflationary pressures have hit more than just the fuel industry – the cost of food has also continued to rise. The good news: Cash back offers at restaurants and grocery stores aren’t affected, so you see the same great offers you’re used to as you shop for the things you need.