Perfect storm of domestic, international issues pushing prices at the pump
DELMARVA – If you’re stopping at the gas pump any time soon, you can expect to be paying much more than you did last year, or even just a month ago.
Pain at the Pump
The national average is up to $3.46 per gallon, according to Ragina Ali with AAA Mid-Atlantic. “Here in Maryland, the price stands at $3.44 a gallon. That’s about 97 cents – just a little less than a dollar compared to this time last year,” she said. “In Delaware, motorists are paying $3.48 a gallon. That’s $1.05 more than what motorists were paying this time last year.”
There are a lot of different reasons for the increasing pump prices in the U.S. “We start with the pandemic, which reduced demand, and therefore oil companies produced less. They also stopped building and filling up refineries,” said Delaware State University political science professor Dr. Samuel Hoff. “When you have inflation, that affects states and local governments. They turn around and increase gas taxes. Then, that gets down to the consumer.”
Throw pandemic supply chain issues and rising production costs on top of that, and a perfect storm of growing gas prices will brew. Crude oil is currently trading at about $90 per barrel. That’s $30 more than the price of oil in August.
In November of 2021, President Joe Biden released some of the United States’ strategic oil reserves. While Dr. Hoff says that helped on a temporary basis, dipping into the reserves too much could pose a risk. “If there is a real emergency, and a military situation in the U.S. where you would need those strategic reserves, that would cause even more of a crisis,” he said.
Meanwhile, Dr. Hoff says while OPEC is being asked to produce more oil, they aren’t working fast enough. “They’re keeping the supply down and as long as that’s occurring and demand is increasing, that’s going to be a problem,” he said.
Plus, multiple geopolitical issues overseas are also contributing to the pricey pumps. That includes natural disasters in Ecuador and Libya, Iraq’s elections, the stalling of the nuclear agreement with Iran, and the war in Yemen, according to Dr. Hoff.
Perhaps most concerning, is the standoff between Ukraine and Russia. “Russia itself provides 40% of the energy in Europe, and that’s in all forms – oil, natural gas, and coal,” said Dr. Hoff. “A crisis that might be precipitated by Russia’s [potential] invasion and the placing of sanctions would affect Europe in a significant way, and that certainly would have ramifications for the United States,” said Dr. Hoff.
Hard to Predict
Ali says there’s not really any answer as to when we can expect those prices to go down. “Unfortunately, as long as oil continues to stay in that high range, we can certainly expect to see gas prices trend a little higher,” she said.
Dr. Hoff says gas prices could come down if the United States gets their finances more in order, and inflation is reduced. Other options could include drilling for more oil, or moving more towards electric vehicles. “It’s a movement that ultimately will help the environment and have less volatility in the oil markets,” said Dr. Hoff.
But, there are some things you can do to help save. That includes hitting all your errands in one trip, and maintaining proper maintenance of your vehicle. “If you are required to drive to work, possibly carpool with others. We also encourage motorists to really do their homework for gas prices before they shop,” said Ali.