Gas prices are hitting all-time highs across the United States, making it incredibly difficult for many consumers to travel and afford other essentials. It is even harder when increasing gas prices cause a ripple effect on the prices of other goods and services, such as groceries.
As high gas prices bode negatively for families and the economy at large, you may be curious why this is happening and what is being done to slow or stop the rise.
What’s Causing Gas Prices to Skyrocket?
If you drive a car, you may be accustomed to gas price fluctuations, especially over the past few years. Typically, the gas price directly corresponds with the supply and demand of crude oil. When the crude oil supply is higher than the demand, the prices fall.
On the other hand, when the crude oil supply is significantly lower than the demand, the prices rise.
During the pandemic, the demand for crude oil fell as more Americans were working from home and could not travel due to public health mandates. Likewise, similar experiences were happening all over the world. The global drop in demand kept gas prices relatively low.
In fact, according to the U.S. Energy Information Administration, the average national gas price in April of 2020 was just $1.93 per gallon. That’s nearly three dollars less than what you’re probably seeing at the pump today!
As the world collectively emerged from the pandemic, it was expected that gas prices would rise slowly and steadily as most folks transitioned back to in-person employment. However, a major threat to the crude oil supply caused a sudden spike in prices.
In February 2022, the president of Russia, Vladimir Putin, invaded Ukraine. In response, many countries placed sanctions on Russia to dissuade their actions and cut their war funding.
In particular, the United States severely sanctioned Russia and banned imports of Russian oil. This sudden sanction had an immediate effect on oil supply, increasing prices rapidly.
How Does the U.S. Plan to Slow Rising Gas Prices?
The United States is the leading producer of crude oil in the world, so the American supply of oil may not be threatened by the sanction long term. Yet, it takes time for the industry to begin to produce and refine a higher amount of oil and gas.
Even if this is the case, it is important to remember that the prices were set to rise due to increasing demand in any case. Simply, they were not supposed to rise as quickly or steeply.
That said, President Biden declared that the U.S. plans to release 1 million oil barrels from the Strategic Reserves. This release can help cut gas prices while waiting for production companies and refineries to catch up.
Over the next six months, Americans can expect to see the gas prices steadily fall from their unprecedented highs.
However, many lawmakers still think the U.S. government should be doing more to relieve the pressure off American people. The Senate may be considering a federal gas tax holiday, or relief from paying an extra 20 cents per gallon at the pump.
Some states are considering implementing this holiday at the state-level if the federal bill is not approved. However, since these gas taxes are a source of funding for roads and bridges, this may be taken off the table.
Other policy makers want to introduce federal gas rebate payments directly to Americans. The current proposal stands at $100 per month for any month in which the gas prices are higher than $4. Governors are also considering this plan at the state-level.
For instance, issuing prepaid debit cards to registered drivers as a form of relief. In the same vein, a proposed plan to pay for higher gas rebate relief payments would be to raise taxes on big oil companies.
Grappling with High Gas Prices
While waiting to find out if gas prices will decrease over the next few months, there are a few things consumers can do to help reduce the pressure on themselves and their families. One of the best ways is to consider gas rewards programs, grocery rewards programs, asking to work-from-home, utilizing other modes of transportation when possible, and joining ride-sharing programs.