Gas Prices Continue to Increase

I’m sure that if you have been watching the news, listening to your parents, or paying for gas itself, you know how expensive gas is. As of April 7th, in Nassau County, New York, gas prices per gallon were $4.268, which is a lot compared to last year’s average of $2.901. You might wonder, “Why is gas so expensive?” It’s a lot more complicated than you think, with a multitude of reasons.

Firstly, COVID-19 has caused plenty of damage to the world economy, and one of the reasons is inflation. Let’s say in 2019, 5 barrels of oil cost $15 (this is a hypothetical); with shipping slowing during Covid has the number of barrels decreased, which wouldn’t be so bad as the barrels would be worth $6, right? Nope, inflation has caused the price of the, let’s say, only 2 barrels to go to $20, inflation has caused prices to rise at the same time stock of oil has decreased, causing the price of oil per gallon to rise a couple of dollars. (A link below will show the actual prices of barrels of oil.)

Covid restrictions have become increasingly damaging as workers aren’t allowed to work, and production decreases are stopped entirely. In China, they have a “Zero Covid Policy,” which shuts down entire cities and areas in order to keep Covid cases at 0; this has caused lots of cities to be shut down and also oil refineries, which of course, ramps up the price of oil to nations that import Chinese oil like Australia, and even though here in the US we don’t use Chinese oil that high price impacts here too since the global economy is connected increasing our prices more.

Now for the biggest and most prominent cause for the increase in price, the War in Ukraine. Foreign companies and investors have been running out of the country; they have left Russia due to its “Humanitarian Violations.” It is because they felt that other companies and investments would leave Russia, so they did it themselves, causing a chain reaction. Anyways, this lack of investment and foreign companies has caused the Russian economy to shrink and start collapsing. In turn, this has caused Russian oil and gas to collapse too, causing prices in Europe to rise and, in turn, the rest of the world. This is the leading cause of the current spike in price.

Here is a reason that only has a mild effect currently and has a more significant impact in the future, America, and Canada have been producing more oil than ever before; in fact, in America, imports from the Middle East have been declining, and what oil we still import mostly comes from Canada, oil produced here has to come from shale and sand adding an extra process. At the same time, in the Middle East, they take it straight out of the ground, refine and sell it. This has caused North American oil to be a bit more expensive, the effect is small, and it’s an overall positive since soon America will be an overall oil exporter rather than an importer, and we probably won’t join any more wars in the Middle East since they don’t hold our oil interests anymore.