Reason Why Indiana, Kentucky, and Illinois Gas Prices Continue to Skyrocket Might Not Be What We Think
After traveling to visit my family in Indiana this weekend, I was stunned to see just how high gas prices are in the Tristate and every other part of the country.
We are all feeling the sting of how expensive it is to do the normal things we love to so do this summer. Driving to work is getting to be too expensive.
Why is this happening?
It's so very confusing, I'm trying to make sense of it for myself. I know nothing about economics or the world of oil production, but I did a little research to try and find some answers and I was a little surprised at what I found.
Will we see some needed relief from high gas prices in the near future? I hate to be a Debbie Downer but according to experts, probably not. Here is why.
How high are gas prices right now?
Here in the tri-state, we've seen prices go above $5 a gallon. According to a recent article by CNBC, they have never been higher.
"The average price for a gallon of unleaded gasoline rose above $5 nationally for the first time due to increased demand from the economy reopening from the pandemic and depleted oil supplies stemming in part from the war in Ukraine. Prices look set to continue rising into the summer months."
It's so confusing to try and figure out why we are hitting record highs when it comes to gas prices. Like with most things, everybody has an opinion on who or what to blame. So, what is the truth? Can truth be found? Or, are there so many factors it's hard to figure out what the reason boils down to. Is there a who or what to actually blame? Let's investigate...
Gas prices are high because of lots of different factors all coming into play.
Several things around the world are playing a factor in a surge in gas prices, but it really all boils down to economics 101. You know, basic supply and demand.
During the pandemic, many oil refineries shut down because the need for oil was much lower. And since Russia (one of the countries we import from) is currently producing less oil because of sanctions imposed from the Ukrainian war, there is less oil to be had on the global market. If oil prices drop, oil refineries won't be able to keep up with the high demand that will result.
So why not just produce more American oil?
Some complain, including me that politicians, including the president, could just tap into our oil reserves and that would help prices go down. But, the president tapped into the reserves and still gas went up.
The Guardian reported "At the end of March, Biden announced another tapping of the strategic petroleum reserve. The average price per gallon has jumped 77 cents since then, which analysts say is partly because of a refining squeeze."
So why is that?
According to the New York Times, the US is the largest producer of oil in the world, but the oil we produce cannot be refined here and it's too expensive to convert the oil refineries to refine US oil. So, we have to import much of the refined oil we use in our petroleum-based products. The US is down 900,000 barrels of oil per day, as compared to 2019, because of the lack of refineries. That means that the supply is down but we still need as much, if not more than we ever needed.
This coupled with the fact that earlier this year, The National Highway Traffic Safety Administration announced new aggressive future fuel economy requirements. By 2026, all new vehicles sold in the U.S. will have to average at least 40 miles per gallon. Can you imagine some of these trucks and SUVs that currently consume 11-15 mpg getting over 40 mpg? Sounds like a dream, right?
And many car companies have set goals to completely phase out vehicles that use gasoline in the future. GM announced in January that it plans to phase out petroleum-powered cars and trucks by 2035 in favor of electric vehicles with no tailpipe emissions. - Today
KFive reports, "Some refineries that produce gasoline, jet fuel, diesel, and other petroleum products shut down during the first year of the pandemic when demand collapsed. While a few are expected to boost capacity in the next year or so, others are reluctant to invest in new facilities because the transition to electric vehicles will reduce demand for gasoline over the long run.
So basically, in order for consumers to be *somewhat* oil independent in the future, we'll suffer big time now. Yes, electric vehicles use fossil fuels in power production. According to Fox News, "Eighty percent of an EV’s volts stem from disgusting natural gas (38.3 percent), nasty coal (21.8 percent), and glow-in-the dark nuclear (18.9 percent). Only 20 percent flows from beautiful windmills (9.2 percent), gorgeous solar panels (2.8 percent), renewable-but-fish-spooking hydropower (6.3 percent), and other "green" sources."
What can be done to help gas prices start going down?
Immediate, much-needed help bolis down to us, the drivers. Experts say we need to start driving less. By doing that, we could help reduce the demand for gas therefore helping to slowly put an upward spike on supply which would help to bring prices down.
But, who can do that? It seems like a far-fetched solution. Many people, like me, commute to work and can't just start driving less. We have to drive many miles to work because we can't do our jobs from home.
While those who can work from home might find themselves doing their jobs from home, again.
Like during the pandemic, extremely high gas prices could easily find us living and working again from home. It's a truly awful situation for those who can't work from home.
Higher energy prices hit lower-income families the hardest. Workers in the retail and the fast-food industry can't work from home — they must commute by car or public transportation. The National Energy Assistance Directors Association estimates that the 20% of families with the lowest income could be spending 38% of their income on energy including gasoline this year, up from 27% in 2020.
I feel like I understand it all a little better, but it's still a mess. A mess that seems to be only getting worse. It's definitely a moment of extreme change, both nationally and globally. It often seems like our efforts to try and help one issue only end up hurting another. There are never any easy answers.
For now, like you, I will try to get by and hope that gas prices start coming down instead of going up.
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