Gas Prices

Introduction

Amid rising inflation, perhaps one of the most notable goods to become more expensive is gasoline. As has been common as the world reopens, high demand emerging from the pandemic was met by insufficient supply, driving gas prices to their highest point since September 2014 and a 40% increase in average gas price since February 2020. Crude oil, which producers use to make gasoline, averaged $84 a barrel in October 2021, nearly double what they cost a year prior.

Skyrocketing natural gas costs have also increased demand for crude oil; why pay for expensive natural gas when crude oil is comparatively cheaper? At the height of the pandemic, demand and oil prices plummeted as shutdowns went into effect, and non-essential travel was almost non-existent. These low prices slammed the oil industry, which has still been hesitant to ramp up production again amid uncertainty about the future of the Coronavirus. As Americans have returned to a somewhat normal life, the demand for gas has risen again. Because this now high demand exceeds low supply, prices have gone up.

The Biden administration has urged the Organization of the Petroleum Exporting Countries (OPEC) – the group responsible for much of the global oil supply – to increase exports in light of high prices. OPEC and its allies, however, have barely adjusted their rates of production and seem content with elevated prices. In addition, President Biden has directed the Federal Trade Commission to investigate the possibility of anti-consumer behavior by the oil and gas industry. He further instructed the FTC that if it discovered any anti-competitive or other illegal business practices, it should “bring all of the Commission’s tools to bear.”