Why are Gas Prices so Ridiculously High?

The last few years have been a hectic time for everyone. In 2021, we’ve seen gas prices rise from about $2 per gallon to over $3.40 per gallon, and even higher in many areas.

Gas prices are higher now than they have been in the last seven years. Since many people continue to face economic hardship, the rising gas prices only add more stress and anxiety to their daily lives.

Many different theories are floating around about why gas prices are so ridiculously high.

Politicians love to play the blame game by accusing their partisan rivals of causing the problem. But who or what is really to blame for it? Let’s take a closer look and find out.

Below are the top 4 reasons why gas prices are so ridiculously high.

1) High Demand and Low Supply

The COVID-19 pandemic forced people to stop traveling in 2020. It caused the demand for fuel to decrease because fewer vehicles were on the road.

You might remember the gas prices were pretty low in 2020. Because of this, oil production slowed down.

In 2021, the government started to lift its travel restrictions after the COVID-19 vaccines were developed. It caused more people to hit the road again and travel for the first time in over a year.

Unfortunately, oil rigs and refineries had a low supply of oil to accommodate the rapid increase in consumer demand.

This circumstance has forced oil companies to raise their fuel prices until they can increase production again.

2) Bad Weather

Each hurricane season has been highly active over the last five years. When bad weather events like hurricanes occur, they slow down oil production and transportation.

A good example is when Hurricane Ida caused most oil production companies and refineries in the Gulf of Mexico to close temporarily.

These types of temporary slowdowns and setbacks will reduce the global oil supply, which causes fuel prices to rise.

There is nothing that can be done about bad weather other than trying to combat climate change.

Environmentalists believe reducing carbon emissions will eventually diminish the intensity of hurricane seasons in the future.

Even if all the nations on the planet start doing the right thing now, it could still take decades before the effects are seen in the weather.

3) Price Gouging

U.S. President Joe Biden has called on the Federal Trade Commission to investigate why oil companies are increasing gas prices.

He believes some illegal conduct might be occurring where oil companies are price gouging to increase profits during these difficult times.

There are laws against price gouging on products that are necessities for people, such as gasoline.

However, sometimes a greedy company will take advantage of high demand and consumer desperation by inflating prices to maximize profits.

Perhaps that is happening with the gas prices, but it is not for sure yet. We’ll see what the investigation uncovers.

Sadly, there is not much that consumers can do about the price gouging because they are forced to pay whatever the oil companies want them to pay for gas.

4) Oil Pipeline Closures

One approach to combatting climate change is closing international oil pipelines. The theory is that shutting down major pipelines will reduce the damage done to the environment.

Consequently, the effects of shutting down significant pipelines are higher fuel prices. For example, when President Biden closed the Keystone XL Pipeline that runs between Canada and the United States, it significantly reduced the oil supply in North America. Many critics blame the pipeline shutdown for the increased gas prices in the region.