In recent weeks, individuals have been taking to social media to explain their frustrations with rising gas prices, many forcing blame on the President. However, many do not realize the various determining factors involved in creating the prices per gallon that you see displayed. The cashier at your local Sheetz or Speedway has no influence over the amount you pay. Instead, high gas prices have more to do with the following factors.
High Crude Oil Prices
Our gasoline supply relies on the production of crude oil, sourced through drilling. This fossil fuel is critical to the transportation industry, heating and electricity generation and other products. Whether due to global circumstances or availability, rising crude oil prices have a direct impact on gasoline prices. As investors scramble to afford higher prices for barrels of oil, they have to make the difficult decision to raise gasoline prices to make up for this difference, so they don’t lose business on their end.
Supply and Demand
Supply and demand will always influence prices in a variety of industries, as consumerism is the constant determining factor as to what products are in need. There is a basic formula to supply and demand that can help calculate whether prices will be high or low. For instance, when the demand for a product, like gas, is higher than the supply, prices are bound to skyrocket. On the flip side, when demand for a product is lower than the supply, such as when gas wasn’t needed much during the pandemic due to lockdowns, prices will be lower. The changing seasons also influence supply and demand, as each spring sees an uptick in prices.
Due to our nation’s dependence on oil production in other countries, a disruption in this consumer relationship can lead to high prices on our end as we look elsewhere for our supply. Throughout March 2022, the United States and many other major countries imposed sanctions on Russia as a direct result of their attack on Ukraine. This was done with the intention of hurting their economy, as they are a massive supplier of crude oil. As a direct result, gasoline prices rose catastrophically, although many are acknowledging that higher gasoline prices are a small price to pay to impose a bit of justice upon the Russian government. Regardless of individuals’ feelings on the matter, this particular situation goes to show the heavy influence that our international partners can have on the prices we pay at home.