Why Gas Prices are Rising and Why You Should be Concerned

The reason why gas prices are rising during the pandemic

Almost any American who has a car these days can tell that the gas prices are rising once again to unprecedented heights. Such a situation has inconvenienced people and made owning a car more of a pain than anything. People don’t understand how or why it happens, and it doesn’t hurt to know how this comes to pass. To understand just how exactly the pandemic has affected these prices across the world, read this article.

The Prices

In America, there’s no denying that the prices have risen significantly this past year. In most of the country, gas prices have increased to an unprecedented $3.14 per gallon. That’s just the national average, however. In California alone, costs can be seen as high as $4.30 a gallon, with some people having to pay over $100 just for a full refill. This 40% increase from original prices at the start of 2020 has dramatically inconvenienced the average American throughout the country, particularly those who live on the west coast.

Pandemic

The pandemic is one of the critical factors why gas prices have risen, given that crude oil prices have skyrocketed since this worldwide infection. You see, when the pandemic started, traffic around the world slowed to a crawl, especially for international travel, making planes much less used, even domestically, which meant a lower oil demand. This situation caused oil companies to produce less oil and have a significant amount of surplus. With many parts of the world now opening back up again, the level of demand has changed once more.

OPEC

In response to this re-increase in demand, OPEC has been scrambling to meet such needs once more. In layman’s terms, the organization was unprepared for the oil market to go back up quickly, which is fair considering the unstable state of trade with the global pandemic. Plus, this would include the need to renegotiate a new trade deal with other countries to meet a quota of sorts which is another obstacle in the way.

Negotiations

Since not enough barrels are being produced for Americans to consume, the value of oil given to us increased, thus being more expensive. Trade negotiations between OPEC and the Emirate Arab States are undergoing tense sessions to fix this issue, but it’s a slow-going matter. Things could get even worse if members of OPEC started going their way. At the rate, they either produce their barrels of oil or sell it. 

Conclusion

With the state the world is in now, there’s no telling when OPEC and the other Arab countries will get their act together and come to an agreement, which means there is no definite answer as to when gas prices in America could return to a pre-covid rate. One can only sit back, wait and see how it plays out in the future and how companies will avoid these mistakes in the future.