The average price of a gallon of gas in the U.S. is at an all-time high of $4.43, significantly above the previous record of $4.11 set in 2008. Certain parts of the country are experiencing even higher prices: drivers in some parts of California are paying over $6 per gallon and looking for alternative ways to save.
U.S. Sanctions Against Russia
International sanctions are no joke, especially imposed from one global superpower onto another. Sanctions are often only used in place of actual military action, and the results are arguably as severe.
Overall Oil Production Ramping Up Too Slowly
In 2020, during the height of the pandemic, demand for oil was at an all-time low. Oil-producing nations faced crucial decisions with their own supply chains. As a result, Russia and members of OPEC (a 13-member group of prominent oil-producing countries including Saudi Arabia, Iraq, and Iran) cut oil production by almost 10 million barrels.
Hesitancy by Oil Companies
While being in the oil business is historically a profitable venture, many large companies are still shaken by their pandemic-ravaged numbers. According to the New York Times, Exxon Mobil’s 2020 was their worst year in four decades, losing $22.4 billion, after recording a profit of $14.3 billion in 2019.
Simple Supply and Demand
The Oxford dictionary defines supply and demand as the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.