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BUDGETING General

Gas prices are on the rise: where will it end?

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Higher than ever
You’ve probably noticed: gas prices are at an all-time high. For those who drive a lot, that’s bad news. Around the world, the energy crisis is driving these increases, and the U.S. is playing a major role in the rising demand for gasoline. A lot has changed in a relatively short period of time. Due to the COVID-19 pandemic, governments reduced travel to minimize the spread of the virus. As a result, demand for gas was at its lowest point and prices dropped significantly. For a long period, gas demand remained very low due to an increased surplus.

On the other hand, oil suppliers also suffered. Refineries had to shut down due to lower fuel requirements and low gas prices. The years 2020 and 2021 were also difficult for many employees: people had to be displaced or became unemployed. In order to stimulate the economy, the U.S. government encouraged spending by providing COVID stimulus checks to American families.

Today?
More and more people are leaving their home office and driving to work. Activities such as transportation have become part of the daily routine for many of us. As more and more people drive, the demand for fuel increases and if the increase in supply cannot keep up, prices will continue to soar. The result is that you are paying much more than you were before the COVID-19 pandemic.

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The latest increase in gas prices is mainly due to OPEC+. This is the Organization of Petroleum Exporting Countries, plus Russia and its allies. It governs some of the world’s largest oil reserves, with Saudi Arabia being a major leader. This intergovernmental organization attempts to control the price of oil by altering its supply. Economists often think of OPEC as a cartel. Therefore, prices can fluctuate and as long as OPEC changes its supply, prices will also change. Due to the increase in demand, OPEC was expected to reach an agreement to produce more barrels, but instead maintained current production rates. This translates into higher prices at the pump.

When does it end?
In theory, it may take more than a year for demand to return to normal levels, but it’s hard to say. Today, less oil is being produced and, due to the global energy crisis, this situation will only get worse. As a result, prices will soar, so it is unlikely that prices will come down anytime soon.

There are more important factors related to gasoline prices. Federal, state and local taxes also contribute to the retail price of gasoline. In some places, you are likely to pay more than in others. Another factor is the cost of other ingredients that can be blended into gasoline, such as ethanol. In addition, distribution and marketing also play an important role. Some retail outlets are owned by refiners and others are independently owned. As a result, the price at the pump can vary widely.

What you can do
Beyond the obvious solutions, such as taking public transportation instead of your own car, there are other things you can do. There are several ways to save money and ease the pain at the pump. If you’re traveling by car, do some research first by comparing prices. Some stations offer discounts if you pay with cash, for example. Other stations have special fuel-saving programs that can be very attractive to you. You can often find these by using gas apps that will show you nearby gas stations and their real-time gas prices. You may also want to consider skipping premium gas (unless it’s mandatory) and choosing regular gas instead. Often, many cars will indicate that premium is recommended, but it is not a necessity.

In conclusion, prices will continue to go up and down due to multiple factors. For now, working class and low income families will be hit the hardest. They spend more of their income on transportation and tend to drive vehicles that are not as fuel efficient as others. The future of electric vehicles will be very important to people around the world. Not only because of the depletion of fossil fuels, but also for the environment as a whole and ultimately for each other’s health.

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