By Seth Gellman
In the last few weeks, gas prices have surged across America, leading drivers to look for an explanation. Regular gas prices reached $4.25 a gallon this week, and are estimated to reach $4.50 before decreasing again, making this the fastest surge since the aftermath of Hurricane Katrina. While many pointed to the high prices as a result of sanctions on Russia after their invasion of Ukraine, there are more factors at hand.
One of the main reasons for this surge stems from the pandemic. When the demand for oil crashed after the world shut down, OPEC and its allies cut production to support prices. Even as demand returned, production targets remained low. Even now, the targets are low because of fears of environmental regulations, leading to higher costs. Increasing production takes time, and with a combination of supply chain issues and no Russian oil, that will be a tough task. Initially, sanctions against Russia lacked a ban on natural gas and oil for this reason, but on the 8th, Biden banned all Russian oil.
Another reason for high prices is the surging demand. With record job gains and strong economic growth, driving is on the rebound after being hit hard by the pandemic. While commuting may not reach pre-pandemic levels, largely due to new work from home opportunities, it continues to skyrocket.
Some Republicans claim that the surge in gas prices is solely due to Biden’s ban on Russian Oil and cancellation of the Keystone XL pipeline, but prices have been steadily rising. While these may have played a part, it certainly was not a significant one. In fact, the US gets less than 20% of Russian oil sold in the global market. Experts predict high oil prices until Labor Day as the Biden administration seeks a solution to curb it.