All Time High
As you’ve probably noticed: gas prices are at an all time high. For those who drive a lot, that is bad news. All over the world, the energy crisis is driving those increases and the US plays a big role in the rising demand for gas. A lot has changed in a relative short period of time. Due to the COVID-19 pandemic, governments curtailed travel to minimize virus spread. As a result, the demand for gas was at its lowest point and the prices dropped significantly. For a long period of time, the demand for gas stayed very low due to an increased surplus.
On the other side, oil suppliers were suffering too. Refineries had to shut down due to dropping fuel needs and low gas prices. 2020 and 2021 was also a hard year for many employees: people had to be displaced or became unemployed. In order to boost the economy, the US government encouraged spending by providing COVID relief stimulus checks to American families.
Today?
More and more people are leaving their work-from-home office and go back to their workplaces by car. Activities such as transportation are now part of the daily routine for many people among us. Since more people are getting in their car, the fuel demand increases and if the increase in supply cannot keep up the prices will continue to soar. This results in paying a lot more than you used to do before the COVID-19 pandemic.
The last increase of the price of gas is mainly caused by OPEC+. This is the Organization of the Petroleum Exporting Countries, plus Russia and its allies. It governs some of the largest oil reserves in the world, with Saudi Arabia as an important leader. The intergovernmental organization tries to control the price of oil by changing its supply. Economists often consider OPEC to be a cartel. Prices can therefore fluctuate and as long as the OPEC changes it supply, prices will change, too. Due to the increased demand, the OPEC were expected to come to an agreement to produce more barrels—but instead chose to maintain current production rates. This results in an higher price at the pump.
When Does It End
In theory, it can take more than a year for demand to come back to normal levels, but it is hard to tell. Today, less oil is being produced and due to the global energy crisis this will only worsen. As a result, prices will go skyrocket and it is therefore unlikely that prices will drop soon.
There are more important factors linked to the prices of gas. Federal, state and local government taxes also contribute to the retail price of gasoline. In some locations it is likely that you pay more than in other locations. Another factor is the costs of other ingredients that can be blended into the gasoline, such as ethanol. Besides that, distribution and marketing also play an important role. Some of the retail outlets are owned by refiners and other are independent businesses. The price of the pump can therefore be very diverse.
What You Can Do
Beyond the obvious solutions such as choosing public transport over your own car, there are other things that you can do. There are several ways to save and lessen the pain at the pump. If you go by car, make sure you do your research first by doing a price comparison. Some stations will offer discount when paying in cash for example. Other stations have special fuel saving programs that can be very attractive for you. You can often find them by using gas apps that will show you nearby gas stations and real-time prices of their gas. You can also consider to skip premium gas (unless it is required) and choose normal gas instead. Often, many cars list premium as recommended, but it is not a necessity.
In conclusion, the prices will continue going up and down due to multiple factors. For now, the most brutally hit will be the working-class and lower-income families. They spend more of their income on transportation and tend to drive vehicles that are not as fuel-efficient as other vehicles. The future of electric vehicles will be very important to people all over the world. Not only because of the depletion of fossil fuels, but also for the entire environment and eventually the health of one another.