Rising gas prices, who is to blame?

Gas prices are on the rise once again, disappointing those hoping to see the national average drop below $3 a gallon.

Because increasing gas prices are one of the areas that working-class Americans feel the most, that pain at the pump can easily turn into frustration, or even anger, aimed at the President.

But is that blame accurate?

Gasoline is refined from crude oil. Crude oil is a global commodity with many factors determining its price. However, like most prices, it largely boils down to supply and demand. These are the key factors affecting the current high prices of gas.

The War in Ukraine

Russia has long been one of the top three crude oil producing and exporting nations, along with Saudi Arabia and the United States. When Putin launched his war of tyranny against Ukraine, Russian oil was quickly sanctioned. That initially led to gas prices spiking around the world.

Despite Russian oil being sanctioned, some countries, mainly China and India, were still able to purchase the oil due to how the sanctions were defined.

Recently, Ukraine launched drone strikes against Russian oil refineries, which have had a major negative impact on Russia’s oil-producing capabilities that are hurting Russia's economy and war efforts but also raising crude oil prices globally as it is reducing the global crude oil supply.

OPEC and OPEC+

OPEC, the Organization of the Petroleum Exporting Countries, is a group of nations that has long collaborated to determine oil production, control supply, and, therefore, manipulate prices.

The OPEC nations are Saudi Arabia, Iraq, UAE, Kuwait, Iran, Nigeria, Algeria, Libya, Venezuela, Congo, Gabon, and Equatorial Guinea.

In 2016, OPEC signed an agreement with additional nations, known as OPEC+. This was in response to the United States' growing crude oil production, which was driving down oil prices. By including these additional nations, OPEC+ now represents about 60% of the world’s oil supply, giving it significant leverage over the oil markets.

The OPEC+ nations are Russia, Mexico, Kazakhstan, Oman, Azerbaijan, Malaysia, Bahrain, South Sudan, Brunei, and Sudan.

While the US has continued to increase crude oil production, which has been easing costs, OPEC+ has continued to announce more oil production cuts to counteract America’s production in an effort to keep oil prices high. They’ve announced additional production cuts recently.

US Refineries Preparing for Summer

Each year around this time, US gas prices increase. That is because the refineries that take crude oil and produce gasoline begin maintenance to prepare for the Summer increase in gas usage. Having refineries under maintenance means less gasoline is produced, which again increases prices.

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So far, none of this connects back to President Biden, however you may be thinking that what the US should do is simply produce more crude oil, to increase the supply, and lower the costs. The problem is that the US is already doing that.

America is at a record-high level of crude oil production, higher than any nation in all of history. The US is also at record-high levels of crude exports, which has helped ease the global increase in oil costs. Overall, the US saw a smaller increase in gasoline prices than Europe because some countries in Europe, such as Germany, had heavily relied on Russian oil before the war in Ukraine began.

If the US is producing such a high level of crude oil, why are we exporting so much of it instead of using it ourselves in order to control our own prices?

The first reason is that there are different types of crude oil. Most US refineries are built for heavy crude oil that America doesn’t produce much of, so the refineries import the type of crude oil they need.

While it may seem like an easy answer to retrofit the refineries to work with light crude oil, that would be very expensive and time-consuming. So far, refineries have not seen a cost-benefit of doing so.

The second reason is ease of transportation. In a major oil-producing area such as the Gulf of Mexico, much of the crude oil is shipped to other nations, with Mexico being the main purchaser.

This is because it is far easier to ship crude to Mexico than to get it all the way to states like Washington or Oregon. Different areas of the US get their oil from different sources, which is why there is such a large difference in gas prices across the country.

At the end of the day, increasing gas prices can’t actually be blamed on President Biden, just as credit for the low gas prices seen at one point in Trump’s presidency can’t be given to Trump.

But that won’t stop Republicans from saying exactly that. They have been campaigning on how better gas prices were when Trump was in office, thanks to Trump, alongside claiming Biden is waging a war on American energy. Neither is true, but the message works.

That is because Americans have no need or interest in understanding the global oil economy. They are dealing with higher grocery prices, working hard to pay their bills, and are angry that gas costs more than it used to. And when you are angry about prices or the economy, the first person you look to blame is whoever is leading the country.

Taking the blame for things you have no control over is an ever-present hazard of being President, and elections are won and lost over those types of issues instead of larger policies that the President does control.

There is also a bigger discussion about America’s overall energy independence. By one metric, America IS energy-independent. We are producing more oil than we as a nation need. But as discussed above, the setup of our refineries and the transportation costs across our nation means we aren’t actually energy independent because we are still importing oil. This means we have to continue to deal with the price manipulation of OPEC+ along with the consequences of other nations being at war.

That is why alternative energy sources are so important. Even for people who don’t accept, or simply don’t care, about climate change, green energy is still the solution, as are electric vehicles. Tackling both areas means our reliance on oil would decrease significantly, thereby decreasing overall oil demand, and our wallets would be better protected from global price manipulation for our everyday needs.

America is on track with green energy production; we may have as much as 80% clean energy by 2030. However, electric vehicles are lagging further behind in the US compared to the rest of the world, but there are initiatives to make them more attractive purchases going forward.

Electric cars are on the rise in America, with 18% of new cars sold in the second half of 2023 being hybrids or fully electric. The goal is to reach 50% by 2030, but some expectations are as low as 33% compared to the global market, which will see 65-85%.

So as you see the higher number at the pump and watch the politicians toss the blame back and forth, take at least some comfort in knowing that this is a problem that America is actively working on and will soon become a story we tell our children about how things used to work.