By on December 2, 2021

Unless you’ve spent the last twelve months locked inside your home, then you’re probably dreading the next trip to the gas station. The average price for a gallon of 87 octanes has reached $3.40 in the United States. That’s about 50 percent steeper than it was at the start of 2021 and undoubtedly more than you’re wanting to shell out today. Though one cannot ignore the dizzying rates being advertised outside of British “petroleum parlors” or France’s many “un bordel pour voitures.” Canadians are also forced to endure higher gasoline prices, as the government tends to stack the taxes a little higher and the U.S. dollar tends to be more valuable. At least for now.

All you need to know for the purposes of this article is that fuel prices are up and it’s influencing the economy in some pretty dramatic ways. 

Let’s start with the obvious. When gas prices are low, humans tend to scurry around their given territory more regularly. But the inverse is true when they’ve crept up to a point where drivers start second-guessing which trips they’ll be making due to a newfound aversion to filling up. That could mean fewer trips to the local grocery store, forgoing vacations, and even opting out of other purchases to make sure the fueling budget is robust enough to make it to work every day. Gallup polls have consistently shown that consumer confidence in the economy can be inversely correlated to the average price of gasoline.

This hurts retailers, who see fewer people visiting the local shopping center or logging onto their website. Higher gas prices also mean loftier shipping rates, with the difference frequently being passed onto consumers. This is particularly true of products coming in from overseas, as they’re required to traverse thousands of miles before reaching a final destination. Airline tickets will also go up in value as fueling prices tend to represent a large portion of the industry’s overhead.

Then there are the jobs. While the United States has seen an outcry for entry-level positions (e.g. food services and retail), elevated gasoline prices typically begin restricting employment the longer they persist. We’ve seen this begin to manifest among the gig economy, especially as it relates to the ride-haling/delivery services offered by Lyft and Uber.

According to the Financial Times, drivers and analysts covering the sector are reporting changes in payment algorithms to account for a 59-percent rise in the cost of fuel over the past year. Customers are being charged more and contractors are making less, encouraging them to spend fewer hours per week behind the wheel — and not just in North America.

“Drivers seem to be driving less,” Melissa Berry, editor at The Rideshare Guy, told the outlet. She said the change in driver behavior due to fuel prices “has no doubt exacerbated the driver shortage Uber and Lyft have been periodically finding themselves in.”

From FT:

Petrol prices, posted at corner stations, have been among the most visible indicators of accelerating inflation in the US. A retreat in oil markets over the past week may bring down retail petrol prices, but so far drivers have experienced little relief.

And the reason for the oil market reversal — fears that the Omicron coronavirus variant could clamp down on mobility — will hardly cheer drivers on ride-hailing apps.

To cover extra fuel costs, many gig drivers have adapted with changes including rejecting more customers who are far away. Others are quitting.

“Some drivers have been decreasing the amount of hours that they do. Some drivers have gone looking for other jobs,” said Beth Griffith, a former Uber and Lyft driver who heads the Boston Independent Drivers Guild.

An online poll conducted this week by The Rideshare Guy found that 91 per cent of rideshare drivers were worried about petrol prices, and about half of drivers were driving less. Twelve per cent said they stopped driving entirely as a result of high prices.

Uber’s solution has been to encourage drivers to swap to electric vehicles that aren’t reliant on pump gas. But EVs often come with higher price tags drivers cannot afford (even with the sizable tax credits) and are better suited to urban environments where range isn’t likely to become an issue. To remedy the first issue, Uber has opted to purchase 50,000 Tesla vehicles as part of a rental scheme. However, it’s charging employees a staggering $344 a week to use them, making it seem as though the entire plan was designed to take advantage of drivers in their moment of desperation.

With with vehicle operators paying an average of $3.40 a gallon for regular unleaded (up from $2.27 this time last year, according to data from GasBuddy), regular Americans are having to make increasingly difficult decisions of how to allocate funding as inflation (exacerbated by the fueling issue) further complicates financial matters.

Politicians don’t appear to be fairing much better.

World leaders, including Joe Biden, have been calling for the Organization of the Petroleum Exporting Countries (OPEC) to increase production. But little headway has been made since the current situation gives those nations loads of political influence, encouraging the Biden administration to join with China and a myriad of other gas-blasted nations to tap into their strategic oil reserves in a desperate attempt to ease the financial pressure. Though it must be said that this time in 2020, the United States was energy independent and wholly un-reliant on foreign oil. Perhaps with sounder energy policies, that could be true again.

As things currently stand, West Texas Intermediate crude has still gained around 45 percent this year — which happens to be great if you’re the one selling it. But local oil producers are under pressure from investors to limit output to maximize profitability. Meanwhile, environmental activism has made pursuing any energy that’s not deemed renewable taboo. This has made it more socially acceptable and financially prudent for energy concerns to raise prices, rather than increase volume.

Don’t believe us? You might want to take a gander at the stock market. Energy has been dubbed the S&P 500’s top-performing sector for 2021.

[Image: Michael Vi/Shutterstock]

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98 Comments on “Rising Fuel Prices Have Upended the Economy...”


  • avatar
    SPPPP

    It’s the QE, though, innit? It sure would be nice to own lots of disposable assets like real estate and stocks right now. I wonder how modern politics would look if our 3 branches of government were filled with people without trust funds?

    • 0 avatar
      28-Cars-Later

      I think random citizen selection would work better at this point. Kind of like Hunger Games except the reps don’t kill each other… unless hmmmm maybe we could have an element of that too? TWO MEN ENTER, ONE MAN LEAVES.

      • 0 avatar
        kjhkjlhkjhkljh kljhjkhjklhkjh

        I would back the crap out of this :)

      • 0 avatar
        thegamper

        I am wholeheartedly behind a draft system for all high level Federal positions. Taylor the qualifications, must have high school diploma, college, advanced degree depending on position. No no criminal record, civil judgements, etc…then serve a two year term and onward.

        Most high level elected officials are so out of touch with the average American it is pretty sad. When you need millions to win an election at that level, go figure its the rich that end up in those seats.

        • 0 avatar
          Bill Henderson

          It’s our fault. We keep electing these bozos. Until Americans wake up and pay attention, this will not change.

          • 0 avatar
            28-Cars-Later

            Based on events since 1/1/20, I don’t think “elections” are going to have much of an impact. Its obvious to me now this stuff has been go for broke, its just not as simple as another political scandal or typical red team vs blue team antics. The veil has been lifted and the gloves have come off – short of a nuclear event, extraterrestrial event, or Ebola like event (none of which I would rule out in the near to mid term) I don’t see how they could be more serious about their absolute evil.

          • 0 avatar
            EBFlex

            I thought the releasing of the strategic oil reserves (that President Trump was chastised for filling when oil was cheap) was supposed to be the end all cure for our high gas prices. Did Xiden get another thing wrong? FJB LGB

        • 0 avatar
          FreedMike

          “When you need millions to win an election at that level, go figure its the rich that end up in those seats.”

          I’d say it’s more like “the rich” (and I include rich people and special interest groups from across the ideological spectrum in that group) putting the people they want in those seats.

          • 0 avatar
            jkross22

            Mike,

            If Lincoln or JFK or Eisenhower were politicians today, none would make it. The electorate today is too slow to understand what leadership looks like.

            At some point, hopefully enough of us will open our eyes and realize that we have one party (despite the marketing of D/R telling us otherwise) and that arguing about racism or abortion or gun rights – all important issues – pale in comparison to the robbery occurring under our watch.

            Leaders like Lincoln, JFK and Eisenhower knew this. It’s a pity the majority of us ignore them.

      • 0 avatar

        “TWO MEN ENTER, ONE MAN LEAVES.”

        Does not work. That one man (or woman) will rig the game.

        • 0 avatar
          theflyersfan

          @Inside Looking Out: Maybe…but wouldn’t it be fun to watch a WWE-style Elimination Chamber match between the melting Sith Lord Mitch McConnell, Nancy Pelosi, Chuck Schumer, and Lindsey Graham in each corner? Put broken beer bottles, tables, chairs, Lucille from The Walking Dead (the bat, not the zombified wife), ladders, lighter fluid, and a book of matches and watch all of them settle their differences in a match with a 30 minute time limit?

          I’d shell out PPV bucks for that one.

    • 0 avatar
      markf

      “I wonder how modern politics would look if our 3 branches of government were filled with people without trust funds?”

      The problem is not trust funds, the issue is someone like Biden, Pelosi and countless others work for the Government their entire careers and are now magically worth 100s of millions on salaries that never break 2-300K

  • avatar
    Astigmatism

    Quite simply, this is what happens when the economic outlook changes in the course of a few days while worldwide oil output takes months to adjust. A year ago the US pressured OPEC to slash production to prop up prices; they did, and prices started to rise. Then economic activity rebounded a lot quicker and more robustly than expected, and oil production hasn’t increased to keep pace.

    • 0 avatar
      Lou_BC

      I read a Canadian news story pointing out that fuel prices should have dropped recently but various entities have not adjusted prices as a means of increasing profits. We are seeing that elsewhere in the economy. COVID-19 and supply chain issues have been a convenient foil to justify high prices.

      • 0 avatar
        theflyersfan

        @Lou_BC – I see that every week here in my part of Kentucky. I’ve learned to fill up on Sundays. During the course of, say 13 days, gas prices might trickle down a cent every two or three days. And then all of a sudden, overnight on Sunday into Monday, they suddenly race upwards. This happened the Monday before Thanksgiving where gas prices rose around .40/gallon overnight. And all of the gas stations did it. I didn’t hear anything about oil prices increasing suddenly. There wasn’t a war that started, nor a hurricane to disrupt the Gulf of Mexico production, or a massive wildfire in the Tar Sands region of Alberta…nothing. They did it because they can. And it just isn’t travel weekends. What I’ve seen is that gas prices in this area, for 87 octane, tend to over around $3.30 to $3.40/gal. Then they slowly ease downwards to around $3.20/gal and then jump right back up to $3.40/gal. You have to time your fill-ups just right.

        It’s the same thing with the chip shortage. With laptops and printers, I am finally seeing light at the end of the tunnel. Systems that took 4-5 months to be delivered are now taking 1-2 months. Same with printers. But I think the automakers have tasted something good with their greed and are going to keep inventories low for a while knowing they can still make money and not have as much overhead and produce fewer vehicles.

        • 0 avatar
          Lou_BC

          @theflyersfan – the local gas stations in my town don’t tend to be that blatantly obvious. There are a few that do play the price game depending on the day of the week.

          I’ve been in big cities like Vancouver or what we refer to as the “lower mainland” and that happens all of the time there. I always try to fuel up at one of the gas stations on first nation’s reserve land before entering the Vancouver region or take every back road I can find to avoid any of the big cities.

  • avatar
    FreedMike

    Well, in theory, if this problem was due to something under our political control – i.e., domestic oil production – then you’d expect to see a lot less production. But that’s not the case.

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=M
    Average production per month, 2020: 344130.30
    Average production per month, 2021: 335599.30 (through 9/21)

    Difference: -2.5%. Meanwhile, gas prices are up about 52% from this time last year. Domestic oil production isn’t the problem.

    Now, how does a 2.5% decrease in oil supply add up to a 52% increase in fuel prices? You tell me.

    • 0 avatar
      ajla

      Price elasticity?
      I also think 2019 would probably be a better supply baseline.

    • 0 avatar
      Astigmatism

      Meanwhile, _worldwide_ oil production fell from 83 bbl/d in April 2020 to 70 bbl/d by June 2020 – at our insistence – and has been climbing out of that hole ever since.

      https://ycharts.com/indicators/world_crude_oil_production

      • 0 avatar
        28-Cars-Later

        Nov 2018 was the peak at 84.49m/bbl, is that ever happening again?

        No one knows, but in the future that chart may help explain the actions of this decade.

    • 0 avatar
      28-Cars-Later

      “Now, how does a 2.5% decrease in oil supply add up to a 52% increase in fuel prices? You tell me.”

      Probably just transitory.

      • 0 avatar
        FreedMike

        It probably IS transitory. But very few issues rile people up like high gas prices. And the first person who gets blamed is invariably the president. In some cases, that makes sense. You can can directly trace the spikes in gas prices in 1974 and 1979 to foreign policy decisions. In this case, it’s…cough…”supply and demand.” I think that translates as “we took it in the a** with zero lube during the pandemic, and now we’re cashing in.”

        Plus, Big Oil a) knows how much voters hate high gas prices and b) knows most voters are dumb enough to think the president controls said prices, c) is BEYOND pro-GOP, and d) knows the current president is pursuing energy policies that will result in their wallets getting lighter. Now, could they be using prices as a political weapon against someone they want to see out on his behind? Why, of course not.

        • 0 avatar
          28-Cars-Later

          Doubtful.

          Best Case: Welcome to 1970s Part II, staring stagflation, corruption, incompetence and our special guest star multinational tyranny.

          Worst Case: Dollar death spiral and too many Petrodollars flood home in a short time resulting in a *genuine* national crisis.

          • 0 avatar
            FreedMike

            We’ll see how it plays out. But the prime ingredient in ’70s inflation WAS gas prices. My guess is that they come down pretty soon.

          • 0 avatar
            28-Cars-Later

            Production is off about 15m/bbl/day from its peak and 13 of what it was, if that returns it is a possibility assuming Team Brandon does not attempt to do anything to artificially raise costs (since they do seem to be fans of illegal diktats after all). But I’m not bullish on that volume returning, and I will go long oil if that number keeps decreasing and bullsh!t catch-alls continue to creep up to “explain” it to the proles. Such as past/current favorites:

            Its the weather
            Its the deplorables
            Its the magic virus
            Its the people don’t want to work
            Its the chip shortage
            Its the supply chain issues
            Its the global warming/climate change

            and never: Its the EROI of petroleum.

        • 0 avatar
          ajla

          If the White House legitimately believes that the oil industry is engaged in price fixing then the FTC should be investigating it.

          Making inferences over social media should have ended with the last administration.

          • 0 avatar
            FreedMike

            @ajla:

            Well, the bulls**t blame game has to start sometime. If people are dumb enough to buy the idea that Biden is controlling gas prices, they’ll buy anything. And comparing the current administration’s tweetstorms to the last is like trying to compare the porn careers of Sly Stallone and Ron Jeremy.

          • 0 avatar
            ajla

            Less bad *is* less bad but it is still bad.

            I don’t think Biden controls fuel prices but I don’t think the oil companies are colluding to keep prices high and oust Biden either. And, if they are actually doing that then the Biden admin should use the regulatory agencies at their disposal to do something about it.

          • 0 avatar
            FreedMike

            Honestly, the “oil companies are conspiring to get back at Biden” crack is just a tiny bit of trolling hyperbole on my part. Call it a theory that happens to fit the facts.

            We all know this is about speculation. And I’d say it’s also about the folks who make money on oil cashing in after a VERY rough year in 2020.

          • 0 avatar
            28-Cars-Later

            @Freed

            I don’t know enough about the pipeline that was cancelled, but there may be some backstory there between the industry and administration. Off the cuff, I see zero logical reason to cancel and impede pipelines. Cui bono? Rail stocks benefited from Obama’s interference and its likely a repeat hand job to those shareholders at the expense of the oil industry, national security, and everyone else. This is the sort of thing all career politicians do, which is why the people wanted a change in the first place.

          • 0 avatar
            FreedMike

            @28:

            As I understand it, the people behind the pipeline in question – Keystone XL – were already pulling out when Biden finally killed it.

            And there were valid environmental concerns that have nothing to do with global warming – pipelines that carry tar sand oil (like KXL) have a nasty habit of creating oil spills.

          • 0 avatar
            Lou_BC

            There were many factors related to Keystone XL. Pushing through a pipeline on First Nations land was part of the problem. If anything, Canadian oil producers in Alberta where the primary group to get Forked by the cancelation.

            The biggest issue in my mind is that there are pipelines currently being build in Western Canada to ship crude oil to our costal shipping terminals.That means the US government killed a pipeline from a friendly country just so that same friend will now ship to Asia instead..READ C.H.I.N.A.

        • 0 avatar
          golden2husky

          FreedMike, you get it. Think logically. If a president could really influence prices (outside of conditions like your excellent examples show) they would do everything they could to drive the prices down. That would be the smart thing to do politically, especially when the midterms are coming up. Saying Biden wants the prices to be high is like him saying “just kill my chances of re-election and screw my party, too.” It just does not make sense. The oil industry took it hard during the pandemic and now they have the control. Maybe they want to use it for political leverage to gut crucial environmental regs, or maybe they are making hay while the sun shines. Either way they have the power right now.

          Anybody else recall another president who released oil from the Strategic reserve for price concerns…

        • 0 avatar

          “Big Oil a) knows how much voters hate high gas prices and b) knows most voters are dumb enough to think the president controls said prices”

          They knew that the current inhabitant of WH will empty their pockets and try to “green” them but still they voted for him and against Orange Man. They even pretended that election were fair and square despite Demos changing election rules on the fly to accommodate their political interests. I would say they deserve what they get. I would say – make gas prices higher and higher forever to push populous to EVs.

          • 0 avatar
            FreedMike

            Big Oil payoffs went OVERWHELMINGLY to Republicans and Trump in 2020.

            https://www.opensecrets.org/industries/totals.php?cycle=2022&ind=E01

            https://www.opensecrets.org/industries/recips.php?ind=E01&cycle=2020&recipdetail=P&mem=N&sortorder=U

    • 0 avatar
      SoCalMikester

      this is just payback for the NEGATIVE prices under covid

      • 0 avatar
        28-Cars-Later

        That was one of the most hilarious things I have ever seen, even if it was just futures.

        • 0 avatar
          FreedMike

          That and negative interest rates.

          • 0 avatar
            28-Cars-Later

            I see those more as perverse than hilarious, because oil futures going negative is really a chaotic one off and not serious policy put forth by supposedly serious people. Its like they found another way to defraud the world with their already fraudulent monetary system.

            In more laymen’s terms:

            F**k you, pay me interest profit on the imaginary money I sell you to use in our captive financial fraud system.

            to now

            F**k you, pay me double secret inflation on money you’ve already paid me interest profit on to store or use in our captive fraud financial system.

            And if any of youes get cute remember what happened these guys:

            *Points to portraits of Gadaffi, Saddam, Satoshi”*

    • 0 avatar
      thegamper

      I attribute most price gouging at the pump to market speculation. Look at the stock market as a whole and how wildly divorced price to earnings ratios are from reality and the norm not that long ago. All the crypto which has literally no basis in anything of value flying to ever higher prices. Covid and I suppose the great recession have pumped so much excess liquidity into everyone’s pockets that there is literally no escaping consumer inflation. That money is going somewhere and it is driving prices up on everything.

      I haven’t looked through the entire comments section of this yet, but how is it that nobody points the finger at America’s choice in vehicles? Demand could be half of what it is today if pickup trucks and massive SUVs weren’t foisted on the American public. We have nobody to blame but ourselves for this situation. Our unsustainable thirst for unnecessary overconsumption and demand on the government for stimulus at every economic speedbump created this storm. Personally, I think we should consider ourselves fairly lucky at $3.40 per gallon. I suspect most middle class people dont bat an eye at that price. It hasnt changed my habits one bit. Things could be a lot worse.

      • 0 avatar
        FreedMike

        @gamper:
        “I haven’t looked through the entire comments section of this yet, but how is it that nobody points the finger at America’s choice in vehicles?”

        Because everyone wants to blame someone else.

      • 0 avatar
        jkross22

        Gamper,

        It’s not the shrinking middle class being hurt by gas prices. As I mentioned to another commenter, there are 43 million people on food stamps. They’re the ones getting crushed by inflation.

      • 0 avatar
        Lou_BC

        @thegamper – best post by far.

      • 0 avatar
        ttacgreg

        Thank you for pretty much outlining my viewpoint. Plenty of other first world countries have higher gas prices than our current prices.. Generally, the fleets in those countries are more fuel efficient.

        • 0 avatar
          Matt Posky

          The average engine size in Europe is somewhere between 1.4 and 1.9-liters. Their fuel costs around $7.50 per gallon.

          The average price of fuel in the U.S. is $3.40 per gallon, up from around $2.30 last year.

          While we may indeed be spoiled by our large SUVs and glorious V8 motors, I’d rather keep it that way than mimicking Europe’s shortcomings. But maybe I’ve just owned too many big displacement cars. You really feel the pinch of that extra dollar per gallon when you’re only getting 15 mpg.

          • 0 avatar
            Lou_BC

            “glorious V8 motors” Someone’s been possessed by HDC’s ghost ;)

            Ford F150 is the #1 selling vehicle with a “glorious V8” being in the minority. Toyota just ditched their “glorious V8”. Chevy has a Turbo 4 banger in their lineup. With that being said, current V8’s are surprisingly efficient.

            We tend to have space and long distances to travel coupled with cheap fuel. I can still afford to operate my F150. It’s paid for and still dependable so that offsets 1.49 per litre fuel (my truck has a 136 litre tank). My son on the other hand with his pig on fuel old Cherokee and his old F150’s on 1/2 the wages I make finds it biting.

          • 0 avatar
            28-Cars-Later

            “My son on the other hand with his pig on fuel old Cherokee and his old F150’s on 1/2 the wages I make finds it biting.”

            XJ or KJ/KK Liberty (called “Cherokee” in some foreign markets)?

          • 0 avatar
            Lou_BC

            @28-Cars-Later – XJ 2 door with the inline 6. He’s running a 3 inch lift and 33’s so it does have some aggressive rubber to turn. He’s has one parts Jeep and one with a V6 that he wants to finish. He’s got a Jelly Bean F150 extended cab 4×4 that grandpa gifted to him as a grad present. He’s also got a 93 F150 with 8 inch lift on 35’s with 5.13’s front and rear lockers. That one’s sitting due to a blown front diff.

          • 0 avatar
            28-Cars-Later

            An XJ 2-door with the 4.0 I6 is very, very nice. May not at all be practical anymore but quite a feather in his cap IMO. What is this “V6 Jeep”, a Liberty?

            Speaking of Jeeps, last Sunday on the highway I saw a like new black Jeep Commanche – it was glorious.

          • 0 avatar
            Lou_BC

            @28-Cars-Later – the V6 is another XJ. A bit of a unicorn. 2.8 with auto. An acquaintance was in the process of building it up but had to move because of a job transfer. He scored the V6 XJ and a parts XJ with the I-6.

  • avatar
    SoCalMikester

    this isnt the first time gas has been so expensive. if youre too young to remember, too bad. if you were around and thought it would never happen again, youre an idiot

    • 0 avatar
      ajla

      Once you’ve passed a kidney stone there is no reason to complain about subsequent kidney stones.

      • 0 avatar
        Matt Posky

        I recall when the local stations all made regular like $6 per gallon following 9/11. I figured we’d be living the Max Max lifestyle within a month.

        • 0 avatar
          28-Cars-Later

          Did you happen to be spending some time in an alternate universe then? I do recall a BOHICA spike but it was not until Katrina that $3.00 was breached in my neck of the woods. I think it was $4-4.50 in 2007 in the PRK, so I’m not sure how $5-6 was achieved in 2001.

  • avatar
    Arthur Dailey

    Meanwhile gas prices in Ontario have decreased by about 14 cents per litre in just over a week.

  • avatar
    kjhkjlhkjhkljh kljhjkhjklhkjh

    Based on what I know amongst my less gainfully employed relatives, acquaintances and friends..

    they spend to effing much::
    -in the drive through
    -on fancy coffee
    -cigarettes
    -name brand clothing …

    IMO, and likely to not be a popular one.. if an extra 200$ a month cost puts your budget into the negative you have done something wrong. If your financial remainders are less then 200$ a month you need to revaluate.

    Sure .. *some* people are effed in the shorts with alimony, rent-cartel prices for a place to live… but not enough people to the degree the alarmists are proclaiming.

    This just sounds to me like big-oil paying economists to piss and moan to get more us based refineries opened.

  • avatar
    Jeff S

    There is no oil shortage but there is limited refinery capacity due to reduction in refinery capacity over decades and no major refineries being built since the mid 70s. Also just plain greed in that if consumers are driving more and willing to pay more for fuel the oil companies are going to charge more. Prices will come down when people drive less by combining trips and reducing unnecessary trips not including necessary commuting where mass transit is not feasible. Buying a more efficient vehicle when replacing your current vehicle not buying anymore or less than what you need. This was true during the Arab Oil Embargo of 1973 and Iranian Hostage Crisis of 1979.

  • avatar
    SCE to AUX

    In real dollars, gas prices are about average. This hysteria is total BS.

    https://www.randomuseless.info/gasprice/gasprice.html

    They’ve been much higher than today during these periods:
    1979 – 85
    2004 – 08
    2009 – 15
    2017 – 19

    Doesn’t anybody understand how to account for inflation, or have a memory longer than 3 months?

    Besides, what do I care – I fill up my $30k ($23k after credits) EV at home. You don’t have to spend $50-80k.

    • 0 avatar
      FreedMike

      “Hysteria” is the right word for it. Oil prices are already dropping, and I’m sure that gas prices will follow suit – right after the peak holiday travel season.

      Amazing how high gas prices always tend to coincide with peak travel season, ain’t it?

      • 0 avatar
        Lou_BC

        Yup. Inflation. I ran the 1990 F250 I owned through an inflation calculator and it was more expensive than a current F250 with 6.2, 10 speed auto and rear locker, AC, cruise, and power windows and doors.

      • 0 avatar
        markf

        “Amazing how high gas prices always tend to coincide with Democratic administrations, ain’t it?”

        Fixed it for you.

        • 0 avatar
          JD-Shifty

          lowest gas prices were under Clinton. But that’s none of my business. We’ve seen wild price fluctuations in the past. if you care about gas prices you would be driving something that gets 40mpg and shrugging it off.

    • 0 avatar
      Argistat

      Notice how all of the news media loves to headline about “record high prices” of gas without ever mentioning that when adjusted for inflation it’s not that far out of the historical average for the last 5 decades. Or they compare the cost today to the point in the pandemic when oil consumption was far below what is is today.

      The same media always talks about some new “record stock market” rise or drop… of course it’s a record rise or drop in absolute dollars because a dollar is worth less each year.

      Interesting that the gas price now (adjusted for inflation) is less then it was in 2017-2019 :)

      • 0 avatar
        ttacgreg

        Yeah you got to come for inflation. I Remember a number of different prices for different items in the early 70s. Pretty much today’s dollar is worth an early 1970s dime.

        • 0 avatar
          bullnuke

          In 1969 (the year Uncle Sam forced me to seek out the US Navy to escape that Crazy Asian War ™), gasoline in West-Central Ohio was $0.30/gallon and fluctuated a bit, sometimes down to $0.24 during a “Gas War” between the many stations located on pretty much every corner in town. Using usinflationcalculator.com, this translates to around $2.26/gallon in 2021 which is about what I was paying here in West-Central Ohio up until May of this year with swings of $0.50 or so up and down for who knows why. Today prices here were $3.19/gallon or about a dollar higher. Oil out of the ground is bought and sold (usually several times) by traders before even getting to the refineries of the evil oil cabal – the sale prices of crude feedstock have swung high this year. Speculation and market forces went into high gear when potential future sources were executive-ordered out of play causing a typical uncertainty freak-out by all the folks with hands on that oil as it makes its way, being bought and sold, over and over, toward the refiners. The final price is determined more by the churn of the price of the feedstock and less by the evil cabal of the oil companies. I’ve seen gas prices fluctuate several times in my short life and this is, while annoying, history repeating.

  • avatar
    dal20402

    And yet people live comfortable first-world lives in places where the gas prices are twice the highest peak we’ve had here so far.

    I hate to sound like some “personal responsibility” person or something, but gas prices are a known risk, and one people should take into account before they buy a Yukotahoburbaladigator or a house 100 miles from work.

    • 0 avatar
      ajla

      I’m sure you know that increasing fuel and energy costs have impacts beyond people commuting in an F-250.
      I also don’t think everyone living 100 miles from their workplace is doing it for kicks.

      • 0 avatar
        dal20402

        Yeah, I’m definitely oversimplifying. I’ve been in a household where both members commuted significant distances in opposite directions. I know it’s not always avoidable. And I know there are effects beyond pump prices.

        But the point I’m trying to make is that too many people just ignore the risk of volatile gas prices, even though it’s been confirmed again and again and again, in making key decisions. I would not personally choose a life situation where a doubling in gas prices would be impossible to absorb. Long commute? EV if I could afford it, otherwise an efficient car.

        • 0 avatar
          ajla

          I don’t completely disagree but I still do have a bit of a bleeding heart over it. It’s been difficult since early 2020 to buy a new or used vehicle and the people likely most impacted by higher fuel prices are generally just along for the ride when it comes to the vehicle market.

        • 0 avatar
          jkross22

          Hey Dal,

          There are just over 42 million people on food stamps in the US. I’m glad that neither you nor I are in that group, but we should all have a little more compassion for the less fortunate.

          Even that phrase ‘less fortunate’ is a gross understatement. If you’ve ever lived with the fear of not eating, it’s not ‘less fortunate’. It’s terrible.

          • 0 avatar
            dal20402

            I hate that. But some of the same things I’m talking about make it much worse. If we didn’t essentially mandate through a hundred different public policies that car ownership is a necessary prerequisite for a job in this country, many of those people wouldn’t be food-insecure. Some people who don’t have jobs would be able to get them, and others who have low-paying jobs could redirect money from their car toward their kids’ plates.

            Part of the reason poverty is generally less severe in places with $8 gas than it is here is because people can avoid having to buy gas pretty easily. It’ll be a long project to get this country into that position but it’s one we should start working on. Instead, especially in the places with the worst poverty, we’re going in the opposite direction.

  • avatar
    Morea

    Fuel prices aren’t up.

    That’s just a far right conspiracy theory!

  • avatar
    Tree Trunk

    Hangovers from the big truck craze. Anybody that wanted to know knew that gas prices would not stay low forever.

    Luckily there are good and improving options for efficient or EVs out there.

  • avatar
    Trend-Shifter

    If you look at the past 3 and 5 year stock charts of the energy sector the returns have been abysmal. The 3 year return has been around -0.24% and the 5 year return around +0.62%. (Look at Exxon Mobil XOM or the Vanguard index VDE) The one year return is high because it was rising from a deep decline during the virus lockdown but is still below their 5 year old highs.
    In the past the oil sector invested a large portion of their revenues securing resources, extracting oil, and refining oil. The oil industry knew they had to be price competitive so that other energy alternatives such as battery powered cars could not come into play. Investors got along on dividends through the peaks and valleys of a basically flat stock price.
    The recent administration came in just short of declaring war on the energy sector wanting it’s decline in the name of green energy. Cancelling pipelines, cancelling drilling rights, increasing federal land lease costs, EV incentives, and political rhetoric. Based on this, the energy companies can change their focus from being price competitive to maximizing profits in a THEORETICAL declining market. That would include things like reduced investments, control supply, increase stock buy-backs, and increase dividends.
    Expect the returns in the energy sector to improve without any price relief at the pump. This is because we are not ready for the transition to green energy and still need this sector to support our economy.

  • avatar
    bunkie

    Very interesting that the real issue with respect to worldwide oil supply is, strangely, absent from the discussion:

    Iran

  • avatar
    Jeff S

    @Trend-Shifter–You gave the best assessment of anyone about oil companies and rising prices and I would add that the auto industry is in a similar situation with ICE. Stricter regulations on ICE with tighter efficiency standards and the threat of regulating production of ICE out of existence. Only so much you can squeeze out of an engine and transmission to make ICE more efficient and the vehicles that are selling are the larger trucks and suvs with less efficient engines. The manufacturers are limited as to how many larger inefficient vehicles they can sell without being penalized and there are only so many turbo 3s and 4s manufacturers can make and sell especially with demand for the larger vehicles greater than smaller ICE vehicles and EVs. Tesla has been one of the few EV manufacturers that has been successful and it has taken years for Tesla to get there. Less risk for Stellantis to sell fewer hemi V8s at a higher profit margin than smaller ICE and EVs and does not cost the billions of dollars to develop their own EVs. True GM and Ford are promising more EVs and currently have a limited number of EV models. Make less vehicles and make and sell the more popular ones at a higher profit margin which makes the stockholders and top management happier with higher stock prices and bigger bonuses for the CEO and top management. As Trend-Setter said “reduced investments, control supply, increase stock buybacks, and increase dividends.” This is true in most industries including the processing of lumber and making and marketing of most consumer goods.

  • avatar
    ToolGuy

    For $0.18, I can add a banana to my order from the world’s largest retailer (it’s their top-selling product) and it shows up on my doorstep [in a petrochemical bag, thank you Big Oil]. Note that it was grown and harvested A Long Way Away. (Typical person could walk about 1.5 miles on the calories from that banana, but that’s not important right now. Also: If you have never had an Elvis-style fried peanut butter and banana sandwich, you gotta try it – good for maybe 5 miles.)

    As I understand it, there aren’t a lot of rules and regulations around bananas in the U.S. (slightly different in the European Union perhaps).

    The government is all over, around and through the oil industry, and for $0.18 I can currently purchase enough fuel to move a 2021 Silverado 5.3L roughly 4,400 feet (but not from a standing start, and definitely not while towing a load of bananas).

    Note that the stability of the fuel price is very un-bananalike. (Viewed another way, the $0.18 vs. last year gets you exactly nothing.)

    All of that to say:
    –> Theoretically, if the fuel market were more like the banana market, would fuel cost more or less? [In other words, can we get more of a Banana-style Republic?]

    • 0 avatar
      ttacgreg

      Interesting math there. Assuming said Silverado is getting 20 mpg, that means that 18 cents will take my ’16 Prius 12,540 feet.
      All things considered I marvel at how inexpensive bananas are.

      • 0 avatar
        mcs

        An EV like the Model 3 that gets 4 miles/kWh can go 21120 if the electric rate is .18 per kWh. If there’s a free charger within that 21120 feet, you could go a lot further. If you have home solar, then it’s quite a bit further.

        • 0 avatar
          kcflyer

          Do you really think there is such a thing as a “free charger”? If so than explain how the cost of that infrastructure is brought to zero. Just because it’s free to the end user doesn’t mean it’s free.

          • 0 avatar
            dal20402

            Many free chargers are provided by businesses as an inducement to visit the business. I think that will expand as EV market share increases, because some of the best opportunities for street parkers to charge will be when they’re running their errands. If they can get free or cheap kWh for their car at a store they’ll go there.

          • 0 avatar
            Scoutdude

            Yes there are free chargers, several in my general area. Unsurprisingly their chargers have some of the highest utilization rates. https://voltacharging.com/

      • 0 avatar
        ToolGuy

        The particular Silverado I used gets 16 mpg combined (until the owner puts on trendy wheels, straps a tungsten weight to his right foot and races to each red light, at which point it gets Less).

        • 0 avatar
          kcflyer

          “Many free chargers are provided by businesses as an inducement to visit the business.”

          Yes, and I’m sure they do this by lowering their profit margins, or cutting the C.E.O.s benefit package, or reducing shareholder dividends. They would never pass the cost on to their customers, especially the ones who don’t drive EV’s. s/

  • avatar

    I track oil prices for my own amusement and info. WTI for crude last year was $48.36 (12/18/20), $55.17 (12/2/19), $50.93 (12/2/18), $57.36 (12/10/17), $51.68 (12/4/16) and $41.85 (12/1/15) . This year (12/02) it is $66.50 a barrel. Just an fyi.

    • 0 avatar
      SCE to AUX

      It’s been double that much for sustained periods in the past. Of course, gas prices are only loosely tied to oil prices.

      Yet the F-150 continues to outsell everything else. Americans will pay *anything* for a gallon of gas.

      • 0 avatar
        ToolGuy

        Here’s an interesting picture of Americans purchasing fuel seven short months ago:

        https://greensboro.com/news/local/dont-fill-up-gas-tank-unless-you-need-to-experts-urge-panic-buying-or-hoarding/article_64f7f394-b299-11eb-a6e5-d3126801e7a0.html

        (I for one am glad that Price did not play into their decision of Where to Buy at all.)

  • avatar

    Pump prices (for me in my area) that correlate with the WTI crude in my previous post are as follows: 2021 – $3.09, 2020 – $2.09, 2019 – $2.22, 2018 – $2.14, 2017 – $2.39, 2016 – $2.15, and 2015 – $1.95.

  • avatar
    Master Baiter

    The price of any freely traded commodity like oil, stocks, bitcoin, etc. is determined by one and only one thing: Expectations about the future price.

    When you have an administration in the White House that has openly declared war on fossil fuels it’s reasonable to expect fossil fuel prices to be higher in the future. It’s really that simple.

    • 0 avatar
      Astigmatism

      Plenty of simple things are simply wrong. Supply and demand is a two-sided equation; an administration that’s openly declared war on fossil fuel _use_ as well as fossil fuel _extraction_ could reasonably be expected to lead to lower demand and hence lower prices, as much as it could lead to lower extraction and hence higher prices. Basically, a long-term regulatory agenda is pretty much a wash for current fuel prices.

      Much more relevant is _current_ worldwide demand versus _current_ worldwide production. A year and a half ago, people were under lockdown and a lot of people thought a severe recession was coming, so prices plunged and the US led the way in persuading OPEC to slash production. As it happened, the market rebounded a whole lot faster than people thought, but production hasn’t recovered nearly as much. More current demand and less current production means higher prices.

      As you said, it’s really that simple.

    • 0 avatar
      FreedMike

      “Openly declared war on fossil fuels…”

      LOL…why do so-called “conservatives” have to go down the “he’s declaring war on XYZ” path? A few years everyone was declaring war on Christmas. And yet – miracle upon miracles! – it’s still around. Same for guns – miracle of miracles! – no one’s come for them. Ironically, the only president who’s actually done anything vis a vis gun rights was Trump, who outlawed bump stocks via executive order. What, that commie pinko fascist.

      Biden hasn’t done jack crap to influence the supply or demand for petroleum products. In fact, if he COULD control the prices, he’d want them lower. Why? Because he’s a politician and voters like low gas prices. Duh. Plus, there are millions of folks like ol’ master baiter here who are derpy enough to actually believe the president controls gas prices…unless, of course, they go up during the administration of their guy, in which case it’s the glorious free market at work.

      • 0 avatar
        Master Baiter

        “Biden hasn’t done jack crap to influence the supply or demand for petroleum products…”

        From the NY Post:

        “Biden’s disastrous energy policies began his first day with the killing of the Keystone XL pipeline. He’s also nixed new oil and gas leasing on federal land and waters and imposed hefty new regulations on domestic energy production.

        All that is supposedly to save the planet, though that’s hard to square with begging OPEC to do more.

        The latest: The White House is looking at canceling Michigan’s L5 pipeline — which would deepen the shortage and kill thousands of jobs across the Midwest.”

        • 0 avatar
          slavuta

          Some people still talk as if Biden makes any decisions.

        • 0 avatar
          Astigmatism

          So, in your view, Biden nixing a single in-process pipeline is more responsible for raising oil prices than the Trump administration successfully lobbying OPEC to reduce oil production – and ordering a decrease in US production in order to get OPEC to agree – for the specific, stated purpose of raising oil prices?

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