If you have driven your car for the last three months, you have had to fill up gas. While pulling up, you might read the outrageous price of around 5 dollars and 50 cents per gallon. I always ask myself why it would be this high in price. At the root of the issue are supply and demand dynamics.
As we all know, the COVID-19 pandemic started in March of 2020 and still has lingering effects. The beginning of the pandemic brought the country to a standstill leading to a low traffic volume and creating a low demand for gas. As manufacturers realized, they cut back on the production of oil. Fast-forward to July of 2022, 2 years after the pandemic started, life has begun to return to normal with people commuting and regular business activity resuming. Given this, the supply of gas, as an example, has not kept pace with the rising demand, leading to higher prices. Manufacturers are also having difficulty increasing production to prior levels quickly.
On top of that, due to the ongoing Russian invasion of Ukraine, the US has stopped getting Russian oil. This decision has resulted in a 10% decrease in the supply of oil to the American market. Given the high price of oil, many companies are seeing higher profit margins and are not incentivized to increase production quickly.
In New Jersey and Oregon, state law requires gas to be pumped by gas station employees. Gas stations have had difficulty attracting employees for this job during the pandemic, and have had to increase their salaries. This also has contributed to an increase in the price at the pump.
In conclusion, supply and demand dynamics are complex and there are many factors that affect gas prices. I hope that we will see a downward decline in price quickly so that consumers are not penalized unnecessarily.
https://www.cnn.com/2022/06/06/energy/record-gas-prices-causes/index.html
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Itís hard to come by educated people about this topic, however, you seem like you know what youíre talking about! Thanks