The Real Reasons Why Gas Prices Are So High, And It’s Not What You Think
Discover the real reasons behind why gas prices are unfathomably high right now and seemingly only getting higher.
This article is more than 2 years old
To put it bluntly, gas prices are insane right now. The country is quickly headed toward crossing that $6 per gallon threshold nationally. And there is seemingly no end in sight. However, while it may be easy to simply sit back and blame a singular entity for a problem that is propagating immense fiscal strain during a time the country is immobilized by the unceasing chokehold of inflation, the reality is that gas prices are high for reasons far too complex to point any fingers in one direction. Gas prices are high due to a whole host of compounding factors that intersected at just the right time. This, in turn, created the perfect storm to send costs soaring through the stratosphere.
One of the major factors that is driving gas prices higher and higher is that there is insufficient supply to meet demand. So what is affecting supply so adversely that oil production is not able to meet demand? For starters, one of the measurably significant unforeseen factors is the effect that Putin’s senseless besiegement of Ukraine has had on global oil supplies.
Even though the United States only relied on Russia for an almost negligible portion of fuel, that wasn’t the case for many European nations. Sanctions imposed to thwart Putin’s violent onslaughts have necessitated that these countries look elsewhere for oil supplies. This is serving to drive available supplies down because they are being distributed to many more countries. This mitigating factor has driven the price of the raw material up by an insurmountable amount. According to the Energy Information Administration, the costs of raw oil materials currently account for about 60% of the price someone will have to pay at the pump.
Moreover, another thing keeping gas prices high is oil producers’ refusal to be malleable at a time when it would serve the global populace well if they would. Despite repeated beseeching, oil producers remain hesitant to increase their overall output. Why? They have cited fears of an impending oil crash due to historical observations relating to the ebbs and flows of the markets. Second, these major producers don’t want to be left with an overabundance of non-renewable fossil fuels as the world increasingly adopts alternative renewable energies.
Lastly, contrary to the popular belief of many, the United States cannot simply ramp up internal oil production and have it immediately impact gas prices. And perhaps even more unbeknownst to many is the fact that the US is actually the world’s largest producer of oil. It’s just that much of the United States’ oil infrastructure is not set up to refine oil for the ways it is primarily utilized in the country. It would take a lot of time, money, and effort to completely revamp the way the US refines its oil. This is why there is a need to still rely on imported fuel.
To summarize, gas prices are high because supply is not sufficient enough to meet demand due to the effects of the ongoing geopolitical conflict, the non-malleability of oil producers, and because of how the US produces its own oil. There are no quick fixes and there are no easy answers. A series of unfortunate events and mitigating circumstances are what led to high gas prices.
