What has been the increase in the price of gas in 2022?
The cost of gasoline has soared this year due to the high rate of inflation, sanctions on Russia and some flagrant profiteering from major oil companies.
The price of gasoline has been a major concern in recent months as a confluence of factors has pushed the price of fuel soaring in the United States.
On Monday, 3 January 2022 AAA reported that the average cost of a gallon of gas was $3.28 after steady growth since hitting a pandemic low of $1.94 in May 2020. The growth over the intervening 19 months was attributed to a gradual reopening on the economy.
The return to pre-pandemic economic conditions has been the aim of much of government policy but in recent months the cost of gas has continued to grow, soaring to an all-time high of $4.33 in March 2022.
The price had slowly began to fall but now appears to be on the rise again.
Why is the price of gas in the US so high?
As mentioned, there is no single cause for the high cost of gasoline that Americans have been saddled with for much of 2022. There are three primary factors that have contributed to make the value of the resource increase and the availability decrease.
Inflation – Like almost all parts of American life, the cost of gasoline is subject to the soaring inflation that has gripped the country in recent months. To aid the post-pandemic recovery authorities decided to pump additional cash into the economy (stimulus checks, for example) to encourage consumers to spend.
However the sudden increase in spending power also pushed up prices, due in part to the currency being devalued. This has affected everything from grocery bills to mortgages, and gasoline prices are no exception.
Economic sanctions on Russia – It is no coincidence that the all-time high was recorded shortly after Russia invaded Ukraine and the United States announced a series of economic sanctions on Russian-produced oil. The White House had hoped to inflict serious costs on Russia by strangling their lucrative crude oil export market.
But the measure also increased the scarcity of crude oil, a key component in the manufacture of gasoline, making it more expensive to produce. This cost was then passed on to consumers in the form of higher fuel prices.
Profiteering – Aside from the situational context that has made gasoline more expensive to produce and sell, it is also true that major oil companies have recorded record profits in the first quarter of 2022.
In the first three months of the year Exxon Mobil, Shell and many more of the world’s leading oil companies saw their profits rise by billions of dollars. BP posted its highest quarterly profits in over a decade, netting $6.2 billion in the first quarter of the year. During the same period in 2021 BP’s profits were $2.6 billion.