Why The Gas Prices Are Rising? - Facts Traffic (2022)

Right now inflation is the one thing people hate even more than Jake Gyllenhaal. It seems like everything
is more expensive these days. Groceries are more expensive. Cars are more expensive. Ty Dolla Sign
is now Ty Dolla Fifty. I can’t afford that shit anymore.

But there’s one price that people notice more than anything, and that’s the price of gas. More pain at the pump for drivers as we head into the busy holiday travel season. Gas prices keep going in only one direction: up. Gas prices rose over six percent over the last month, up nearly 50% over the last year. Gas prices are at their highest levels in seven years.

According to AAA, we’re looking at $3.42 a gallon on average right now. NEWSMAN: Americans are spending $430 million more every day on gasoline than just one year ago today. Every time I fill up, it’s close to, like, $80, $90. It’s, like, uh… do you want to eat steak or do you want to fill up your tank? Yeah. That’s a tough choice. Do you want to eat steak, or do you want to pour gas in your car? I mean, I do have to say, you don’t have to choose. Yeah, you just fill up your car and then drive it into a cow. Boom! Then you get both. No, but for real, though, this is a big problem.

High gas prices affect so many aspects of life, like, from getting to work to childcare to, you know, all your friends who bike becoming even more smug about it. But the question is why are gas prices going up so much? Well, like everything in our life right now, it has a lot to do with the pandemic. So, let’s talk about why this is happening and what Joe Biden can do about it in another installment of Getting Back to Normal-ish.

(Video) No One Has the Balls to Tell You the Truth About Gas Prices, So I Will

Why The Gas Prices Are Rising? - Facts Traffic (1)

Think back for a moment to the spring of 2020. Much of the world had ground to a halt, which meant that people weren’t driving. They weren’t visiting friends or going into the office or hanging out of the passenger side of their best friend’s ride, trying to holler at me. If you left your home at all, it was probably to take a sad walk around the block. I mean, at least until you heard someone cough down the street, and then you ran your ass back inside.

Now, because all of that, that meant that America’s oil industry, which had been producing more
than any country in the world, basically shut down. And even though society has ramped back up again, the oil industry hasn’t.

NEWSMAN: Early in the pandemic, demand for gasoline dropped dramatically as workers
were told to stay home.

NEWSWOMAN: That immediately walloped the oil and gas industry like nothing ever in its history has ever hit them before. At one point early on in the coronavirus crisis, the price of a barrel of oil, it cost less than zero dollars.

(Video) Gas prices rise in Washington, nationally after lengthy period of decline

NEWSMAN 2: When prices dropped abruptly with the pandemic shutdown, U.S. shale producers dramatically slowed the drilling of new wells.

Rigs were taken out of service, and oil production in the U.S. dropped off significantly. They shut down production. They laid off tens of thousands of workers to try and stay alive during the pandemic. Just like everything else in our lives, oil production has been impacted by COVID. It can’t just flick a switch at a refinery and operations and have everything back to normal. Yeah. One of the reasons gas prices are so high is because America is making less gas than it did before the pandemic. Because people may be driving again, but that doesn’t mean that it’s easy for gas producers to just instantly produce as much as they were before. You got to grow a whole new dinosaur and smoosh it until the oil comes out. That takes time. And it makes sense that it’s gonna take them time to adjust. I mean, it’s been hard for all of us, right? Every single one of us. It’s been hard for us to get back to normal life after the pandemic.

Now, if America isn’t making enough oil to keep up with demand, then why doesn’t it just buy more from the rest of the world? Well, it could, but it turns out the people who control the oil in the rest of the world, well, they just don’t feel like sharing.

Gas prices really not being driven up by the demand on the horizon. It’s really more about the supply. Oil-producing nations are actually constricting the supply a little bit because they’re trying to recoup their pandemic losses. There’s a cartel that controls the price of oil internationally, and that cartel is called OPEC.

(Video) Despite crude oil prices plummeting, gas prices are way up in Washington

NEWSWOMAN: OPEC, the biggest oil-producing nations, aren’t increasing the amount of oil they release into the global economy, so as demand rebounds in the U.S., Americans are paying about $16 more to fill up their tanks than a year ago.

NEWSMAN: President Biden recently appealed to OPEC and Russia to boost production but received a flat no. Wow. They received a flat no. I mean, to be fair, every “no” coming out of a Russian is a flat no. Have you ever talked to a Russian person? They’re never afraid of a flat no. “Hey, are you having a-a good day?” “No.” “Well, there’s… there’s always tomorrow, right?” “No.” And, look, you can understand OPEC’s position. I mean, how much longer is oil gonna be around? Right? They need to make money on this shit now before we’re all driving Elon Musk’s cars that curse out Bernie Sanders when you honk the horn.

Why The Gas Prices Are Rising? - Facts Traffic (2)

And, by the way, you also know what this means, right? You realize that this is the first time America could openly go to war for oil. Because usually when America goes into the Middle East, it’s always like,
“This isn’t about oil. My son is going over there to fight for freedom.” But if prices go any higher,
now Americans can just be like, “Kevin, you get your butt in that fighter jet “because your dad is not paying six dollars a gallon! That’s my steak money!” Now, the good news is America is not going to war yet. But asking OPEC nicely also didn’t work. So the big question is, what can be done to lower gas prices? Well, the bad news for President Biden is not much. The Biden administration is scrambling for solutions to one of his biggest, biggest political liabilities, soaring gas prices.

NEWSWOMAN: Like presidents who came before him, Joe Biden has few options when it comes to combating high fuel prices. Nearly a dozen Senate Democrats are calling on Biden to consider all the tools available at your disposal, even the extreme step of banning American oil exports, which Goldman Sachs warned would be counterproductive and could actually raise prices. The president also considering tapping the Strategic Petroleum Reserve, though industry experts
have warned that would do little to alleviate the problem.

(Video) Rising gas prices could impact summer travel plans

NEWSMAN: If you ask the energy industry, they would say, “Well, the White House could cut environmental regulation, and maybe that would help.” And it could, maybe for next winter, but that would take some time. President Biden does not have a magic wand to dramatically lower gas prices. And if he did, judging upon his sinking poll numbers, -he would use that magic wand.
I don’t know about that. I mean, I feel like even if

Joe Biden did have a magic wand, he’d still need to recite a spell. And based on what we’ve all seen, I do not have confidence that he’d be able to get it right. What’s tough for Biden is that it doesn’t matter what else he does. If the price of gas stays high, that’s that. He could sign all the infrastructure bills he wants. He could get everyone to agree on abortion. But all people care about is how much is the black goo from the ground. Higher than before? Then get them out of here.

So it’s not exaggerating to say that his whole presidency, his entire presidency, could depend on whether
gas prices stay up or go down. And based on this new PSA the Biden administration
just put out… they’re willing to try anything.

ANNOUNCER: All across this great nation, Americans are feeling pain at the pump. But help is on the way. We at the Biden administration know you want nothing more than for gas prices to go back to where they were last year, which is why we’re laser-focused on the one method guaranteed to make that happen, creating a new pandemic. As we speak, our world-class scientists are working hard to develop the next big viral strain. They’re experimenting with expired wombat meat, -iguana sneeze droplets and whatever they can scrape off the New York City Subway. We’re throwing all of it
into a big ole blender and feeding it to a sick hippo. Trust me, if COVID-22 is out there somewhere, we’re gonna find it. We’re not stopping until gas prices are the least of your problems
once again. That’s the Biden promise.

(Video) U.S. gas prices reach new record high, as demand for gas drops

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FAQs

What are the reasons for high gas prices? ›

High demand for crude oil and low supply pushed gas prices upward this year. And though the Federal Reserve has raised interest rates four times so far in 2022—and is planning on more raises in the near future to nudge prices down—there are other factors at play internationally.

What are the 3 main factors that impact gas prices? ›

The retail price of gasoline includes four main components:
  • The cost of crude oil.
  • Refining costs and profits.
  • Distribution and marketing costs and profits.
  • Taxes.
15 Mar 2022

What are the effects of the rise in gas prices? ›

Average price for regular unleaded gallon of gas. These higher energy prices seep into almost every major part of the economy. They drive up the costs for electricity, transportation, shipping, logistics, air travel, agriculture, fertilizer and the production of other commodities.

Why have prices gone up? ›

The COVID-19 pandemic caused a shock to the world economy, disrupting supply chains and contributing to major delays in shipping. Labor shortages and surging consumer demand have only exacerbated this problem. With many items in short supply and the cost of shipping going up, prices are increasing.

Why is oil prices so high? ›

Global oil production was already only slowly recovering from Covid-related disruption, with some major producers struggling to increase supply and the US pumping significantly less than before the pandemic. That made it harder to quickly replace Russian oil, leading to supply tensions that inflated fuel prices.

Who controls the gas price? ›

Five Fast Facts About U.S. Gasoline Prices. Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.

What factors control gas prices? ›

The primary factors impacting gasoline prices are global crude oil cost (61%), refining costs (14%), distribution and marketing costs (11%) and federal & state taxes (14%), which are generally reflected in the wholesale costs that gasoline retailers pay to distributors.

Does the government control gas prices? ›

It's that they have very little control over it. Yes, policies and legislation can certainly play a role, but gas prices are largely dictated by oil prices and oil prices are dependent upon supply and demand.

How does gas affect the economy? ›

Rising gas prices may force some businesses to re-evaluate their hiring plans, holding off because they are uncertain about the economy's health. Less discretionary spending results in decreased sales, both of which can influence a company's ability to hire.

How does gas prices affect transportation? ›

When the price of fuel goes up, carriers are required to increase their prices or take some losses. The rising costs of fuel affect the whole industry in that if it costs more for the freight carrier to transport goods, the shipper is charged more to transport those goods to make up for the increased costs.

How oil prices affect the economy? ›

The Bottom Line

High oil prices can drive job creation and investment as it becomes economically viable for oil companies to exploit higher-cost shale oil deposits. However, high oil prices also hit businesses and consumers with higher transportation and manufacturing costs.

What is causing inflation 2022? ›

Supply chain crisis

Some economists attribute the US inflation surge to product shortages resulting from the global supply-chain problems, largely caused by the COVID-19 pandemic. Another cause cited include strong consumer demand driven by historically robust job and nominal wage growth.

How can we stop inflation? ›

One significant monetary way to curb Inflation is to control the money supply in the economy. If the money supply goes down, the demand for goods will reduce, causing a price fall. Another way to curb the money supply is when the government withdraws specific paper notes or coins from circulation.

Why is gas so expensive in the US? ›

Demand for oil has also bounced back from the depths of the pandemic faster than oil production. A second major driver of rising prices is the costs of refining crude oil. These costs are also going up: Refineries have shut down in the past few years, outpacing the new refineries being built.

Why is gas so expensive 2022? ›

Experts say factors to blame for the high cost of gas in California — now more than $5 a gallon — include problems at refineries that supply the state as well as higher taxes, more regulations and the same global issues driving the overall U.S. market.

Who controls the price of oil today? ›

The price of oil is set in the global marketplace. Oil is traded globally and can move from one market to another easily by ship, pipeline, or barge. As a result, the supply/demand balance determines the price for crude oil around the world.

Is gas a free market? ›

The U.S. is the biggest consumer of gasoline in the world. Gas prices in this country are the product of the free market and private oil companies' stockholders.

Do gas stations make money on gas? ›

Retailers Make Very Little Selling Gas

Generally, the markup (or “margin”) on a gallon of gas is about 15 cents per gallon (gross profit before expenses). Factoring in expenses, which include rent, utilities, freight, labor and credit card fees, a retailer is left with about 2 cents per gallon in profit.

What is the future price of oil? ›

“The Brent crude oil spot price in our forecast averages $98 per barrel (b) in the fourth quarter of 2022 (4Q22) and $97/b in 2023.

What are the five main factors that affect the price of oil? ›

These factors include:
  • Demand.
  • Supply.
  • Quality of Oil.
  • Speculation.
  • Demand for Oil.
  • Temporary Price Fluctuations.
  • Investing in Oil and Gas Drilling.
25 Jan 2021

How is gas price calculated? ›

The price of gasoline is made up of four factors: taxes, distribution and marketing, the cost of refining, and crude oil prices. Of these four factors, the price of crude oil accounts for nearly 70% of the price you pay at the pump, so when they fluctuate (as they often do), we see the effects.

What is in inflation? ›

Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

Why the government should not control gas prices? ›

Many think that the cause is oil company greed and that the solution is government-enforced price controls. But price controls on gasoline are a terrible idea. They would cause shortages and lineups and would hurt producers and consumers.

Are high gas prices good for the environment? ›

High gas prices are “unequivocally” good for fighting climate change because people use less fossil fuel and emissions go down, but the poorest people, who don't have other options, also “suffer the most,” said climate economist Solomon Hsiang, director of the Climate Impact Lab at the UC Berkeley.

Are high gas prices good for the economy? ›

Rising fuel prices are noticed by drivers, and the higher cost of gas can impact consumer sentiment and inflation expectations. Economists note, though, that rising wages and a strong job market are working as insulation against the higher prices.

How are gas prices affecting supply chain? ›

The Domino Effect of Supply Chain Costs

The cost of fuel rising forces carriers to also raise their prices otherwise they will take losses. To further explain, a carrier is required to transport freight at a higher rate, so then the shipper will be charged more to offset the difference.

Why did gas prices rise in July 2008? ›

The spike in oil prices in July 2008 came at the tail end of a decade-long energy crisis. Surging demand from developing economies, stagnant production, financial speculation, and tension in the Middle East caused oil and gas prices to steadily climb over the 2000s.

How does oil affect the environment? ›

Environmental impact of oil

Just 1 litre of oil can contaminate 1 million litres of water. Oil pollution can have a devastating effect on the water environment, it spreads over the surface in a thin layer that stops oxygen getting to the plants and animals that live in the water.

How does oil prices affect unemployment? ›

Significant increases in oil prices were a factor of the U.S. higher unemployment rate and recessions, causing high unemployment rates, a drop in stock market prices, and decreases in the housing market.

How much of inflation is gas? ›

Prices for Gas, 1935-2022 ($4.67)

This data is collected by a national survey and can vary from region to region. Between 1935 and 2022: Gas experienced an average inflation rate of 3.89% per year. This rate of change indicates significant inflation.

What caused the gas prices to go up in 2022? ›

In coming out of the pandemic, demand has increased. This increase has been faster than production, supply chain, and employment can keep up with, which has resulted in supply not meeting demand and this drove up prices (Patterson and Goldfarb, 2022).

Why is gas so expensive 2022? ›

Experts say factors to blame for the high cost of gas in California — now more than $5 a gallon — include problems at refineries that supply the state as well as higher taxes, more regulations and the same global issues driving the overall U.S. market.

Who controls gas prices in USA? ›

Five Fast Facts About U.S. Gasoline Prices. Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump.

Does the government control gas prices? ›

It's that they have very little control over it. Yes, policies and legislation can certainly play a role, but gas prices are largely dictated by oil prices and oil prices are dependent upon supply and demand.

How can gas prices be lowered? ›

Some of these steps include:
  1. Slow down. * Each 5 mph you drive over 60 mph is like paying an additional $0.15 per gallon for gas. ...
  2. Keep your car maintained and running smoothly. * Tune ups. ...
  3. Use your engine wisely. * Avoid Excessive Idling. ...
  4. Be smart about driving. ...
  5. Keep your car light.

Which country has the highest gas prices? ›

A price is expensive or cheap in relation to your purchasing power. If the cost of gasoline in Switzerland seems at first glance “sky-high,” it is actually not when compared to the level of wealth in the country. Hong Kong has the highest price in the world (US$2.98 per liter, US$11.28 per gallon).

Will oil prices go up? ›

Crude will slip to an average of $101 per barrel in the second half of 2022, said Natasha Kaneva, head of global commodities research at JPMorgan. She projected that the price per barrel would be $98 in 2023.

Why California gas is so high? ›

Why are gas prices so high? Officials are blaming California's higher prices on planned and unplanned refinery maintenance, which is slowing oil production. Hurricane Ian could also disrupt production in the Gulf of Mexico by impacting large coastal refineries.

Who set the price of oil? ›

The price of oil is set in the global marketplace. Oil is traded globally and can move from one market to another easily by ship, pipeline, or barge. As a result, the supply/demand balance determines the price for crude oil around the world.

How do gas prices work? ›

The primary factors impacting gasoline prices are global crude oil cost (61%), refining costs (14%), distribution and marketing costs (11%) and federal & state taxes (14%), which are generally reflected in the wholesale costs that gasoline retailers pay to distributors.

What is the future price of oil? ›

“The Brent crude oil spot price in our forecast averages $98 per barrel (b) in the fourth quarter of 2022 (4Q22) and $97/b in 2023.

Is gas a free market? ›

The U.S. is the biggest consumer of gasoline in the world. Gas prices in this country are the product of the free market and private oil companies' stockholders.

What is in inflation? ›

Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

Why the government should not control gas prices? ›

Many think that the cause is oil company greed and that the solution is government-enforced price controls. But price controls on gasoline are a terrible idea. They would cause shortages and lineups and would hurt producers and consumers.

Videos

1. Gas prices skyrocket in Northeast Ohio, rising 45 cents in Akron and 26 cents in Cleveland
(WKYC Channel 3)
2. 'Ridiculous' California gas prices at it again because of short supply
(ABC10)
3. Rising gas prices threatening Arlington family farm
(KING 5)
4. Interest In Electric Vehicles Grows As Gas Prices Rise
(NBC News)
5. Why are gas prices so expensive right now? Here's an update as national average tops $4 per gallon
(WKYC Channel 3)
6. Gas prices rising again in Dallas-Fort Worth
(FOX 4 Dallas-Fort Worth)

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