As gasoline prices shot up this month in Washington Parish and across the nation, nervous motorists naturally asked, “How high will gas prices get, and will gas prices start coming back down?”
Petroleum experts do not expect prices to cross the $5 per gallon mark for regular gas in Southeast Louisiana, and they also expect gas prices to start coming back down --- but it might take a while.
There was a slight decrease in the price of oil on Monday morning of this week, and that might indicate that some stability is returning to the petroleum market, which could eventually result in lower prices at gas stations.
The reasons for the gas price increase are complex, and that has unfortunately worked to the advantage of politicians who are using the high prices to attack one another.
The average consumer doesn’t want to take the time to research global oil economics, nor should they be expected to. But this makes it easier for some politicians to incorrectly lay the blame for the price increases.
As an example, President Biden recently termed the gas price increases as the “Putin’s Price Hike”, blaming the Russian president and his invasion of Ukraine. On the other hand, the Republican National Committee recently sent to The Era-Leader a news release that solely blames Biden himself for the gas price hikes.
But according to petroleum and financial experts, neither of these accusations are totally correct.
The main reason for the increased gas prices is the COVID pandemic. All major petroleum and financial experts agree on this.
When the pandemic hit, people stayed home much more and so the demand for gasoline dropped off a cliff. Petroleum producers were forced to cut production back in a major way.
Oil rigs and refineries were either shut down competely or partially.
Then, more recently, as vaccinations were developed and implemented causing COVID cases and deaths to drop substantially, people increased their mobility, went back to work, and began travelling again.
Thus, gas usage increased --- greatly, in some areas.
But as the many residents of Washington Parish who work in the oil industry will agree, you can’t simply push a button and suddenly have your oil rigs and your refineries at top speed. It takes time for production of gasoline to be restored to where it was before the pandemic.
With much more gasoline now being purchased, yet not as much being produced, America slammed into the law of supply and demand. Prices went up sharply as demand increased.
Then, further complicating the situation, the Russian invasion of Ukraine occurred. President Biden sanctioned Russia for the invasion, including a ban on the importation of Russian oil. This ban was also implemented in much of Europe and many other areas.
The United States imports very little Russian oil. But oil prices are affected by the global supply and demand situation. As some nations that are partially or greatly dependent on Russian oil lost that source, they had to look elsewhere to meet their oil needs, thus stretching the overall global supply. Once again, the supply and demand calculation kicked in, contributing to increased prices.
A third and much more minor factor is the perceived “green” threat that the United States is looking long-term to decrease its reliance on fossil fuels.
However, the petroleum and financial experts seem to be in strong agreement that the pandemic is responsible for something like 80% of the price increase, and that the Russian invasion and other factors probably account for roughly 20% of the problem.
If this is true, motorists in Washington Parish and elsewhere in the nation can expect at some point that gasoline production in the United States and elsewhere will eventually ramp up enough to meet or exceed the increased demand ----- a demand that has greatly increased as the pandemic faded and gasoline usage sharply increased.
From The Era-Leader’s research, there does not appear to be much agreement on how long it will be before gas prices start coming back down. We have heard “weeks” and we have heard “months.” The worldwide petroleum market is in a period of instability, making pricing predictions difficult.
Until gas prices return to their previous levels, all we can do as motorists is to drive as economically as possible. Use cruise control on the open road, check tire inflation carefully, drive at an economical speed, reduce extra weight by removing heavy items from the trunk, reduce drag by keeping windows rolled up on the open road, and eliminate unnecesssry vehicle usage.
