Most people will tell you that when President Joe Biden shut down the pipeline, it sparked a sudden rise in gas prices. Sure, it could be part of the reason, but economists say different.
Gas prices under former President Donald Trump were indeed low, and that’s a fact. But now, the oil industry wants to gain from its losses after a year of low demand.
Biden has also declared a war on fossil fuels, but that’s only one factor on why gas prices are rising.
Sadly, we will see the price of gas soar. It’s already up 25 cents a gallon nationwide. The national average now is $2.68, according to auto club AAA. Sebastian is still slightly lower than the national average.
As of Monday, the cheapest gas prices in Sebastian were at the Mobil station, located at the corner of CR-510 and CR-512.
So, what is the reason for higher gas prices?
Biden’s policies are restricting supply, but that’s one factor. It is not the only reason for higher fuel prices. The world’s economy collapsed last year, so any president, Biden or Trump, would have to tackle this problem carefully.
Biden also wants another $0.40 per gallon federal tax added to gas. That could also cause prices to rise sharply.
While the price of gas is all about supply and demand, the cost of crude oil is the main factor causing the increase this year.
During 2019, the coronavirus pandemic kept prices low because of low demand. Most people in America hunkered down in their homes.
In Florida, it’s like life has been back to normal since late 2020 after Florida Gov. Ron DeSantis opened everything back up. But that’s not the story in other states across the country.
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The oil and gas industry has suffered from plummeting fuel sales caused by the COVID-19 pandemic. More than a dozen refineries closed, reducing U.S. production by more than 1 billion barrels per day.
The timeframe for getting them all back online won’t be until 2022-2023. Also, tens of thousands of jobs are lost due to the shutdowns.
Vaccinations will soon drive up fuel costs as more people return to something closer to normal and begin driving and flying again.
The third round of stimulus checks will also drive up spending and fuel prices. Goldman Sachs estimated that $2 trillion in economic stimulus spending could pump up oil demand by 200,000 barrels a day. The higher demand will mean higher gas prices.
Crude oil prices are surging because OPEC and its allies have slashed oil production. When that happens, prices soar, and OPEC is slow to increase output again.
Oil this month hit $60 a barrel for the first time in over a year, and financial experts say it will hit $72 by summer.
Texas just went through brutal winter weather that forced about eleven refineries to shut down in the state, taking nearly 20% of America’s total refining capacity offline.
How high will it go?
Soon, many people will feel the impact of higher prices as they spike during the next few weeks. Fuel prices will then increase again in the summer.
We could find ourselves spending between $3-$4 a gallon for gas by Memorial Day weekend. However, we could pay lower fuel prices if OPEC raises production in the weeks ahead.
As you can see, there are many factors as to why we are seeing higher gas prices. It was very serious that the global economy collapsed last year, and we’re starting to see some of the repercussions in the marketplace.