The Reason Behind Rising Gas Prices

April 18, 2022

In recent months, the surge in gasoline prices has been apparent to every driver. Global Petrol Prices reported the United States average raised up to $5 per gallon. This has become an inconvenience to many Americans and has left them wondering what to place the blame on, and why. 

The United States is the world’s largest producer of crude oil, and has held that title since 2012. At the same time, the US is the largest consumer. The price of crude oil rises and falls with that of gasoline. Oil is a global commodity, meaning global supply and demand regulate its cost. When demand is greater than supply, prices rise. Supply and demand have the biggest influence on gas prices; however, other factors have contributed to the recent price spike. 

It’s likely that Americans are still facing the effects of how COVID-19 affected transportation and gas usage. Initially, the pandemic led to a drop in petroleum prices, resulting in prices rising as supply and demand increased. The cost of oil has steadily increased since last fall, as a result of the ongoing economic recovery. 

More recently, the war in Ukraine has fueled the climbing gas prices; the national average shot up to $3.57 the day after Russia invaded Ukraine. Because the war is aggravating prices, Russian oil is being rejected by traders. With no oil being traded, millions of barrels have been removed from the global supply. On March 7th, President Joe Biden announced that there would be a ban on Russian imports of oil, natural gas, coal, and certain petroleum products. 

Many have considered that the cancellation of the Keystone XL Pipeline is behind the rising prices. The pipeline was originally designed to transport fossil fuels and oil from Canada in a quicker way. In 2017, former President Donald Trump had approved a permit for Keystone XL. It was later halted in June 2021 after Biden revoked a necessary permit for a stretch of the 1,200 mile pipeline that was on US land. 

If it went into effect, the pipeline would have shipped 830,000 barrels of oil daily to Nebraska at its peak. Many experts have agreed that moving along with the pipeline plan wouldn’t have prevented any inflation, and wouldn’t serve as a solution to the issue at hand. The Keystone expansion would have increased global oil production by less than 1%, so the chance that its absence is actively affecting gas prices is unlikely. 

As one would expect, the soaring prices have enraged Americans. Some have gone as far as to turn this into a political debate, and have started accusing Biden and his administration for the raised prices. Presidents do not, and have never, had direct control over gas prices. These assumptions are due to people misunderstanding Biden’s cancellation of the Keystone Pipeline. Some Americans assume that without the pipeline, oil production will decrease. 

The reality is, oil production has slightly increased since Biden stepped into office. Russian oil companies pumped more crude oil in Biden’s first year as president than Trump’s first year. Furthermore, the number of oil rigs operating in the country is still growing, and Biden has actually done little to slow the drilling and production of fossil fuels. Blame can be placed on current supply and demand, the pandemic, and the crisis in Ukraine, not the President.

 

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