Recently, gas prices have risen considerably. Last year, the national average was $2.11 per gallon and that average has increased by over a dollar to $3.41 per gallon (AAA). Many people wonder what has caused gas prices to rise so significantly. Most people tend to blame it on the election of Joe Biden last year. However, it is actually due to the economy opening up more now that COVID concerns are not as prominent as they were two years ago. Demand for gas at the beginning of the pandemic was fairly low, but with the economy reopening, demand for gas has gone up dramatically. This in combination with United States oil companies keeping supply low (to make additional profit) is what has caused the prices to rise so much (Domonoske). When demand for gas is high and the supply of gas does not increase with it, the result is the distressingly high prices we see at gas stations across the United States. Filling even a twelve-gallon tank could cost about $41 dollars, not including tax. If someone fills up once a week, they could easily end up spending close to $200 a month on gas, and around $2,400 for the year. The steady increase in gas prices may very well lead people to make the shift to a smaller or even an all-electric vehicle.
AAA. “Falling Back: Will Shorter Days Lead to Less Demand for Gas?” AAA Gas Prices, 8 Nov. 2021, https://gasprices.aaa.com/falling-back-will-shorter-days-lead-to-less-demand-for-gas/.
Domonoske, Camila. “Why Gas Prices Have Increased in the Last 3 Months.” NPR, NPR, 24 Mar. 2021, https://www.npr.org/2021/03/24/980894432/why-gas-prices-have-increased-in-the-last-3-months.
Hi Megan! This topic definitely hits close to home for all of us. It can be disheartening to see the gas prices steadily climb up every time we pass a gas station. I think you are right about this increase in demand being part of the issue, but I believe there are other factors at play—for instance, inflation. Gas is not the only thing that has been going up in price. Groceries and even the cost of clothing have been going up as well. In a way, I think the policies of the current Biden administration also are to blame. Various of Biden’s policies throughout the pandemic and some of the policies he supports or wants to pass would further increase prices. Overall, this is a fascinating subject, and I appreciate that you chose to discuss this.
Hey Megan! I love this post because it's so relevant to what is going on in most people's daily lives. I have seen the gas prices steadily rise, and I think that now knowing why the prices are getting to be so high make is easier to deal with. Thank you for taking the time to research this, I think it is such a great topic especially for today!
Hi Megan,
I am not in your class, but your post is fascinating. Usually, an increase in prices is due to supply and demand, and I also think that a little of it has something to do with newly elected officials believing fossil fuels not be used to make natural gas because it creates environmental problems, such as pollutions. However, that is not the only thing that creates smog. Inflation is another reason for price increase of not just gasoline but everything. Any change in the demand and supply will affect everything from the cost of labor and manufacturing, goods and services, wages, gas, and more. If demand for something is too high and suppliers cannot keep up, the labor cost will increase along with the increase in the price of manufacturing the product. Oil is one of the most important markets globally as everyone uses oil (Cowen & Tabarrok, 2018). The United States has at least "264 billion barrels of oil reserves" (Egan, 2016, para. 1) that are still untapped. Not to mention that we have more oil reserves than any country in the world.
Inflation is another reason for the increasing cost of fuel and goods and services. With the new administration that we have, their spending has gone out of control, especially with the passing of the "Build Back Better," this is an unwise decision as it will raise inflation even higher than it already is, and we will get tax to death, as we will be the ones paying for this money; for this reason, that I do believe, politicians contribute with the spike on goods and services. With the government printing more money, people will spend more. The more people spend, the more demand for goods will increase when it outpaced the supply as suppliers will have difficulty keeping up.
Reference
Cowen, T. & Tabarrok, A. (2018). Modern Principles of Economics. New York, NY. Worth Publishers
Egan, M. (2016, July 5). U.S. has more untapped oil than Saudi Arabia or Russia. CNN Business https://money.cnn.com/2016/07/05/investing/us-untapped-oil/index.html
Snell, K. (2021, November 16). The House passes a $2 trillion spending bill, but braces for changes in the Senate https://www.npr.org/2021/11/19/1056833510/the-house-passes-a-2-trillion-spending-bill-but-braces-for-changes-in-the-senate