Society runs on automobiles. There’s no denying that, especially now. Fuel prices have been the highest they’ve been in years. Everyone and their grandmother is feeling it at this point. But why exactly? What causes such a large jump in price? And just how long can we expect it to last?
The idea for this article came from a panhandler outside of a Walmart. He was asking for gas money. Whether he was being honest or not, I don’t really care. But one remark he had made was that this was current U.S. President Joe Biden’s fault, further remarking that prices were much better under Trump. And that struck me as odd. Over this last year or so, I’ve noticed this ongoing trend that people believe the president is responsible for gas prices. The logic, I suppose, being that they influence the economy in such a way to allow for more affordable luxuries like fuel.
Now, I’m not some fool that believes every politically charged comment made by uneducated strangers. I know well enough that the president doesn’t control gas prices. But I did realize that I didn’t actually know WHY prices are the way they are. So off I went to do some of my own research. And I found that there are actually five different reasons for the price spike. And that it’s when they combined they way they did that we saw such expensive numbers at the tank.
Reason 1: China Ending the Lockdown
China is one of the largest nations in the world, and they have a simply massive population. They’ve also been struggling pretty hard with containing COVID spread, as a result. One method of containment was lockdowns. But time is passing and infections are lessening, so lockdowns are ending. With fewer people restricted to their homes, more are driving around, working, traveling, and buying gas. As such, demand for vehicle fuel is going up, and the price with it.
Reason 2: The Ukraine Russia Conflict
As you likely heard, Russia invaded Ukraine earlier this year. And it’s not going well for Russia. Aside from losing the actual ground, the nation is now being met with sanctions and restrictions from countries all around the world, including the United States. Problem is, however, that Russia is one of the largest oil exporters on the planet. Europe and China received a majority of those exports, but America did import oil as well. But all of these nations have put a full ban on Russian energy imports. So none of that oil is circulating anymore, leaving less on the market and higher prices as a result.
Reason 3: People Just Want More
The pandemic is loosening, job growth is on a record-rated rise, and people are getting out more. All in all, demand for vehicle fuel is just higher. While not quite back to pre-COVID levels, it’s getting there. And this is only made worse by the summer season, where gas prices traditionally increase. This is due to an increased desire to vacation and travel during the “good weather.” Demand is going up, plain and simple. And though it’s not enough to cause these prices alone, it’s absolutely a factor.
Reason 4: Factories are Scared to Make More
Factories? Refineries? Whatever you call them. The places that produce gasoline. Back when the pandemic hit and demand for fuel dropped hard, we were met with a short-lived but extreme surplus of fuel. You might recall a phase where gas was amazingly cheap. This was because demand plummeted but production remained high. Eventually, the fuel makers cut back production to met the lesser demand. But even though society is going back to the old rate of consumption, production remains low.
Some companies are worried that a second wave will happen, or that government regulations will cut down their production rate. And as such, they are scared to scale production back up to it’s currently desired rate. It’s not an easy or fast process. It needs machines, workers, and technology, all of which are facing shortages right now. Even if they begin ramping up production, demand might change by the time they finish. So while demand is going up, production is staying low.
Reason 5: The Republican Party Is Stopping a Bill From Lowering Prices
This is the closest we get to “this is Biden’s fault.” But, ironically, it’s actually the fault of the opposite political party. Last May, the House of Representatives were presented a bill by the Democratic party. It’s known as the “H.R.7688 – Consumer Fuel Price Gouging Prevention Act.” The bill would crack down on alleged price gouging by energy companies, which would in-turn lower gas prices. Of the 424 of the 435 members of the House participated, 217 of them voted in favor (all 217 were Democrats) while 207 voted against it (4 were Democrats, 203 were Republicans). It’s pretty clear that this issue is a R vs D issue.
The bill passed the House, so it’s now on to the Senate. Currently, the Republican party controls the Senate with 50 members to the Democrats’ 48. This means should the vote follow the same trend as the House did, the bill will fail and prices will not be reduced. Unfortunately, the legal process is slow as all hell, so the vote has yet to occur. It’s possible that it might. But if it does fail, we’ll know exactly which politicians to blame: the one’s that voted against it.
When Will it End?
Each issue is a small piece of the overall picture. But when combined, they create the perfect scenario for gas prices to skyrocket. So when can we expect it to go back to normal?
To be a bit oversimple, it will when these five issues are no longer true or relevant. At the most extreme, this would be a situation where Russian exports are allowed again, the pandemic gets worse enough to merit more lockdowns, winter time hits, production companies ramp up production, and the US Government signs in that bill. But the sad fact is that’s not likely to happen.
We don’t WANT more lockdowns, we want the pandemic to be over. And the Ukraine Russia conflict is complicated. Enough so that we’re not sure we even want to be supporting Russia by buying their oil. Sure, Winter will hit and that will help, but since we have little faith that congress will pass that bill, then we’re stuck having to accept that this might be a new norm, at least for a good while.