If your wallet or purse is feeling the pain of paying a lot of money simply to fill your motor vehicle with gasoline, you are not alone, as the national average price for a gallon of gasoline is at an all-time record high level in the United States — to the point where none of the 50 states have an average price below $4.00 per gallon of gasoline, which is a milestone that has never happened in the United States until last week.
Why National Average Gasoline Price Keeps Reaching New Record High Levels in the United States
Factors which have converged and have been cited to contributing to fuel prices substantially rising in the United States include the hostile invasion of Ukraine by armed military forces of Russia, significant inflation, the 2019 Novel Coronavirus pandemic, increased demand for fuel as the start of the summer driving season nears, and the switch to summer blend gasoline from the winter version of the fuel — all of which propelled the average price for a gallon of gasoline in the United States at a new all-time record level of $4.599, according to data from the American Automobile Association…
…but another factor is the decrease of the inventories of both gasoline and crude oil. According to data of the weekly petroleum status report from the Energy Information Administration of the United States ending as of Friday, May 20, 2022, crude oil inventories decreased again by one million barrels to a total of 419.8 million barrels, which is 64.5 million barrels — or slightly greater than 13.3 percent — below the inventory at this time last year; and it is approximately 14 percent below the five-year average for this time of year.
Moreover, the Strategic Petroleum Reserve decreased by six million barrels from the prior week to 532 million barrels — which is slightly greater than 15.35 percent below the level at this time one year ago.
Inventories of gasoline also decreased by another half of a million barrels to a total of 219.7 million barrels, which is 12.8 million barrels — or slightly greater than 5.5 percent — lower than the inventory at this time one year ago; and it is approximately eight percent below the five-year average for this time of year.
Things could be worse: the price for a gallon of gasoline is $11.087 per gallon in Hong Kong, which is currently the most expensive price per gallon in the world.
“Stupid Energy Politics”?
One other factor which has been circulating in social media is that mere corporate greed in the oil companies is also to blame for high fuel prices — but Ben Lieberman quickly quells that allegation in an interview with John Stossel in this video.
“Well, if Big Oil could raise prices anytime they wanted and get away with it, they why were they so cheap in 2020, 2019, 2018?” asked Lieberman — who is a senior fellow of the Competitive Enterprise Institute — pointing out that “companies are always greedy”.
Lieberman is correct in asking that question, as a gallon of gasoline could be purchased for as low as 84 cents back in April of 2020. No politician can take full credit for that, as the main cause was the height of the current 2019 Novel Coronavirus pandemic. Many people were too afraid to travel or even leave their homes out of fear of becoming severely ill or even dying — so demand for fuel plummeted, which resulted in less production of gasoline from oil refineries…
…and ramping up capacity to meet the renewed demand — which had been pent up over those past two years — could likely take months, which means that supplies of fuel will remain low.
Stossel explains the reasons why he calls what is currently going on with the price of fuel as “stupid energy politics” of the United States — including calling out a member of the House of Representatives of the United States who scolded executives of oil companies to reduce production; and then wondering why more oil is not produced for fuel once gasoline prices increased significantly.
One other video by Wendover Productions attempts to explain the reasons why a gallon of gasoline became so expensive — including blaming the crash of oil futures, which led to the reluctance of oil companies to invest in increasing production via drilling and other expensive methods which require expensive infrastructure, as capital expenditures by the major oil companies are at or near all-time lows: “Simply put: oil companies are not investing in the future anymore. They’re investing in now.”
The narrator in the video argues that the oil and gas industry is a dying industry due to both renewable sources of energy and a desire to protect the environment; and that shrinking the industry can be speedier than the growth of solar, wind, hydroelectric, and other renewable sources of fuel — and thereby raise prices for fossil fuels significantly.
Final Boarding Call
I have felt the financial pain at the gasoline pump myself: filling the tank of this 2022 Ford Edge — which I have not only rented but also spent the night in it because of a disgusting hotel property — cost approximately $65.00, which is the first time in my life I ever paid that much for one tank of fuel…
…and that occurred in Georgia, which is one of the states in the United States with the least expensive fuel primarily due to the tax on gasoline being temporarily suspended by Brian P. Kemp, who is the current governor of that state.
Unfortunately, what is occurring is the simple theory of supply and demand — and with regard to gasoline and other types of fuel, demand continues to increase substantially while supply simultaneously keeps decreasing significantly.
Until this imbalance is somehow corrected — either by an increase in the supply of fuel or a decrease in demand or a combination thereof — expect the price of a gallon of gasoline to remain high for the foreseeable future…
…or even perhaps increase more, as reports speculate that the national average price for a gallon of gasoline could exceed six dollars by August of 2022.
In the meantime, we need to depend less on oil and natural gas and instead use them in combination with solar, nuclear, hydroelectric, wind, and other sources of energy — whether renewable or not — to keep prices low and to avoid running out of supply…
…as well as to prevent one monopoly or oligopoly from controlling a vast majority of the energy needs of our society.
All photographs ©2022 by Brian Cohen.
