Motorists continue to deal with the rising gas and diesel prices throughout the United States and the rest of the world.
Private individuals and commercial businesses do not see any light at the end of the tunnel on this issue despite the government telling people that things are economically better. It just makes it that much harder to trust anything that politicians say.
However, are the politicians responsible for the high gas and diesel fuel prices? It is easy to blame politicians for the rising costs, but they do not set the fuel prices for consumers. Instead, the oil and gas companies set those prices.
Let us summarize the top four reasons gas and diesel prices are so high.
1) Inflation
The COVID-19 pandemic started the significant economic inflation we continue to experience today.
The government shutdowns, trillions of dollars in taxpayer-funded stimulus payments, and constant government spending have increased inflation and fuel costs.
Now, we have the War in Ukraine contributing to inflation. Major countries are sending billions of dollars to help Ukraine fight its war against its Russian aggressors, worsening inflation and fuel costs.
2) Low Supply
Several global events have slowed global crude oil production and trade over the last three years.
First, of course, were the travel and shipping restrictions stemming from the COVID-19 pandemic.
These restrictions reduced the oil supply in countries worldwide, causing rising oil and gas costs. The aftermath of this continues to affect fuel prices to this day.
Second, global tensions between countries have slowed the production and shipping of crude oil.
For instance, Saudi Arabia is the number one oil exporter in the world. But, in June 2023, the nation announced it would reduce oil production by one million barrels or more daily. Low oil production and supply means higher prices for the rest of the world.
The world’s contempt for Russia also causes problems with the global oil supply. Many countries no longer want to do business with Russia because of their war against Ukraine.
Since Russia is the world’s third-largest producer of crude oil, this further reduces the oil supply for the rest of the world. Now, Russia has cut its oil production to focus more on funding its war efforts.
3) Price Gouging
We would all like to believe that oil company executives are honest and decent. But the truth is that many of them put profits above people.
Price gouging contributes to rising fuel costs. It is a factor that isn’t talked about enough in the news.
Oil companies take advantage of hard economic times, such as inflation, and use them as an excuse to increase their fuel prices for consumers.
When people complain about the rising fuel costs, the oil company executives can blame it on inflation and the government rather than themselves. Even though inflation and government regulations are factors in rising fuel costs, price gouging is another hidden factor that adds to it.
4) Environmental Standards
We all want a clean, safe environment with fewer carbon emissions and pollutants. That is why the government has created eco-friendly regulations for automobile manufacturers and oil production companies to help protect the environment.
For instance, automakers are under more pressure to create cars that meet stricter emissions standards.
More importantly, oil and gas producers and distributors must reformulate their oil and gas to accommodate specific local and national environmental standards.
Unfortunately, meeting environmental standards requires oil companies to spend more time and money. These rising production costs increase the price of oil and gas for consumers.
Conclusion
What is the solution for dealing with the rising gas and diesel prices? If you have the money and opportunity to switch to an electric vehicle, you should probably do it. Otherwise, try to find ways to reduce your driving time whenever you can.
