By on March 22, 2022

Shutterstock.com/ALPA PROD

When gas prices spike, we argue.

It’s the current president’s fault. It’s the previous president’s fault. It’s about the Russian invasion of Ukraine, and on and on.

Now Yahoo! Finance columnist Rick Newman suggests that politics and war aren’t the problems, but simple economics are.

Newman says that while sanctions against Russian oil play a part, oil companies are reluctant to produce more oil because if they overproduce, they’ll see their profits sink.

He points to an oversupply situation that existed from 2015 to 2020, and how profits cratered during that time, before the coronavirus pandemic made the situation even worse.

There have been some calls for the Biden administration to allow for more drilling, but Newman cites a policy expert who says that it won’t matter: “The amount of oil and gas leasing the Biden administration has done makes absolutely no difference in the amount of oil and gas we’re producing right now,” said Samantha Gross, director of the energy security and climate initiative at the Brookings Institution. “These things take a while. The industry tends to have a backlog they’re figuring out what to do with.”

Newman also notes that the Biden admin has been criticized by environmentalists for allowing too much drilling, and that most drilling takes place on private land — meaning there’s no need for federal permits anyway.

I’m not defending or critiquing the admin here, nor am I evaluating Newman’s claims. While I/we do that sometimes here, I am not well-versed in the oil market enough to really know if he’s correct or not. But I did find the piece intriguing as a possible explainer for what’s happening with fuel prices.

I’m also a fan of Occam’s Razor — the simplest explanation is the most likely. It seems to me that for all the hullabaloo about fuel prices, it’s likely that simple business realities, and not political decisions, are the cause of high prices at the pump.

Newman may or may not be right, but it’s food for thought.

[Image: Shutterstock.com/ALPA PROD]

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129 Comments on “What Is the Real Reason for High Gas Prices?...”


  • avatar
    JRED

    I like occam’s razor, but I feel like it doesn’t apply to gas prices.

    So many things contributing: Russia/Ukraine, desire for profit, current admin’s energy policy, etc.

    One BIG thing people tend to overlook is the effect of inflation on gas prices. That alone probably accounts for a majority of the problem.

  • avatar
    Fred

    Oil companies including Saudia Arabia do not want to pump for more oil. They are making a lot of money at this price and as this tweet shows, they like it. https://climatecrocks.com/2022/03/06/us-oil-gas-drillers-holding-production-down-despite-record-prices-good-time-to-move-to-renewables/

    • 0 avatar
      brn

      Just like how some automotive companies are making more profit while producing fewer vehicles.

    • 0 avatar
      Luke42

      “Oil companies including Saudia Arabia do not want to pump for more oil. They are making a lot of money at this price and as this tweet shows, they like it.”

      The flip side is that, every time oil prices cause an EV or an efficient gasoline car to be manufactured in place of a “traditional” vehicle, Saudi Aramco loses the ability to sell fuel for that vehicle. This is referred to as “demand destruction”.

      I say the vehicle instead of the person, because vehicles stay on the road for a decade or two — even if they’re resold several times. Every EV on the road is doing car things most days, without burning gas.

      Also, Saudi Arabia is a nation. Saudi Aramco is Saudi Arabia’s national oil company (the Saudi government is a major stockholder), and it has origins as sort-of a joint venture between Saudi Arabia and American oil companies.

  • avatar
    thegamper

    Oil and gasoline prices are largely reflective of current and recent prices in the commodities markets. Futures are bought many months in advance of when you are seeing prices in real time at the pump.

    So much of the price you pay is based on speculation at any given point in time as to what traders think the price is going to be tomorrow based on geopolitics, disasters, wars, etc.

    All the people pointing fingers and wanting to blame somebody are misplacing their ire. The price of oil and gasoline is driven by speculators. The relative availability of oil and gas as well as the price it actually takes to pumps a barrel of oil, refine it and get it to market as gasoline is only one part of the equation. Like so many things right now, whose price seems to have no basis in actual value received (housing, used cars), the price of oil reflects what people are willing to pay for it.

    You need to stop thinking about it as a price at the pump. The price is determined at the macro level by people buying million of dollars worth at a time. Those are the people mostly responsible for the price you pay!

    It boggles my mind that all the people screaming at the government to stay out of their lives are yelling even louder that the government should fix the prices of privately owned/traded commodities so they can fill up their truck for $2 per gallon.

    • 0 avatar
      Jeff S

      @thegamper–Ding Ding you win the chicken dinner. The commodities market is the main factor that determines the cost of oil and thus the cost of oil products which in this article is gasoline and diesel. After that the amount of refined products ie oil and diesel available on the market. Too much product the price will go down too little the price will go up. Product inventory for financials is based on the higher of cost or market for the inventory that is sold and the lower of cost or market is the ending inventory. Doesn’t matter how much the oil costs that you refined at any given time but what its value is once you sell it. The price of the product literally changes when its in the tanker being transported.

      The price of oil in the US is less dependent on the 5% we import from Russian and more dependent on the nervousness in the future market that projects lower oil production based on current events and the potential of them effecting future output.

      • 0 avatar
        FreedMike

        Building on what Jeff said: if you’re going to take the “supply/demand” approach to this, given a jump of 39% (!!!) in gas prices from a year ago, you’d have to think something really dramatic happened to supply, right? But that wasn’t the case. In fact, gas supply has ***increased*** since then. Has demand gone up 39%? Again, no.

        Has something dramatic happened to the oil supply? Domestically, no – we’re pumping more now. Russian oil is theoretically off the market, but that only accounts for 10% of global oil supply – how does that rationally translate to an increase of 39% in gas prices? It doesn’t.

        There is no rational, market-based reason that has made prices behave this way.

      • 0 avatar
        sgeffe

        Certainly the Ukraine situation plays a part, as did the current administration’s anti-petroleum stance. Both caused the speculators to drive the price up because they saw supply constraints in the future.

        Although I’m sure that inflation factors in at least a little—my guess is that it helps keep the upward pressure on the prices since everything else under the sun is also increasing in cost.

        • 0 avatar
          FreedMike

          @sgeffe:

          In fact, domestic oil supply is UP, as is gas production, but let’s go with what you’re saying – speculators saw supply constraints coming in the future – for argument’s sake.

          The bottom line is that gas prices are up ***40 PERCENT*** over one year ago. For prices to go up that much, something almost catastrophic will happen. What is that catastrophe? I don’t see it. Can you tell me what it is?

          Then there’s the “in the future” concept. When, specifically, do they see the supply becoming constrained – next week? Next month? A year from now? It’d make sense to me that prices might up up in this supposedly constrained future, but gas prices up 40% ***today***.

          We can say “they foresaw lower supply” all we want, but in fact, that hasn’t happened. So we get to pay higher prices for this supposed future event now?

          I’m sorry, I don’t see the rationality at all in blaming this on supply and demand. The only rationality I see is that these guys f**k with prices ****because they can****. And we get to foot the bill.

          I’m calling bulls**t on the whole system. Enough already.

    • 0 avatar
      dal20402

      Blaming speculators for volatility is like blaming your blown-down house for the tornado—it gets the causation backward. Speculators add a lot of noise and amplify market swings but at bottom they could not do their thing without some kind of empirical reality behind it.

      We are indeed dealing with a supply/demand imbalance, as boring as it is to say it. We have increased demand from the accelerated COVID recovery and pent-up demand for travel and moving around. At the same time we have a tight supply picture with a lot of contributing factors behind it: the extremely tight labor market, refinery capacity disruptions, shipping disruptions, reduced raw supply in response to the previous COVID slump, and uncertainty about whether Russian supply will be available to the West in the near future.

      And when demand is relatively inelastic over the short term (as it is for gas) even a small supply shock can lead to a substantial price increase. It takes years to change demand patterns for gas, and this situation arose over a matter of months. On top of that, several aspects of U.S. public policy make it much harder to reduce demand for gas in the U.S. than it would be in a free market, amplifying price shocks further and causing the market to take even longer to adjust.

      • 0 avatar
        FreedMike

        “We are indeed dealing with a supply/demand imbalance, as boring as it is to say it.”

        Probably so, but for prices to be up 40%, there must be some catastrophic supply imbalance at work here. And, yet, every fact I can find indicates oil and gasoline production are up.

        It seems we’re all more or less resigned to accepting nonsense like “gas prices are up 40% due to some nebulous, unforeseen future supply event, even though supply is currently increasing” as something we can’t question. Well, I’m questioning it.

        • 0 avatar
          dal20402

          That’s not how demand curves work. If demand is inelastic, a small supply constraint (or even supply failing to keep up with increasing demand) can easily spike prices by a large amount.

  • avatar
    eggsalad

    Fuel prices have a built-in self-spiraling effect that might be unique. The more that fuel costs, the more it costs to deliver the fuel to the station!

  • avatar
    dwford

    You can’t simplify it by saying “It’s Biden’s fault.” He gets the blame because he is in office, just as any president would. You had the fracking boom then bust, and now oil drillers are focused on being profitable rather than drilling at any price. You’ve got Covid hampering supply and transportation. You’ve got the Biden administration’s vocal anti-oil sentiments souring the mood of drillers to invest in more rig, Ukraine, etc.

    Perhaps this price spike will spur consumers to make the next fuel economy leap, just as the 2008 spike did.

  • avatar
    geee

    Sigh, please, just post a chart with Brent crude vs Gas prices. They track right with each other. Then ask yourself, what influences the price of Brent crude? Not WTI, Brent. Sure, WTI tracks to, but it’s Brent you need to explain.

    You at least touched on some of the realities of shale oil (fracking) and the problems with boosting output there. But the shale impact on price is not independent, it interplays with the supply from OPEC+, etc. During the mid 2010s, as price was going up, shale drillers went wild, but the massive supply, given all other countries’ incentives to obtain oil revenues via production, so, combined supply, pushed oil prices lower, which, in turn, burned up a ton of investor money into the shale patch, which infuriated those people. It took years to beat that down, and they have no intention of bringing back massive supply to recreate that problem. They like controlled supply and costs, with high prices, for profits. The permits issue is a total red herring and not worth discussing.

    Another issue with gas prices, they surge up very fast with oil price increases, but they are slow to fall, for a number of reasons, but there isnt a consensus on this. Inelastic demand doesnt really cut it although it might explain longer term changes. But a whipsaw price like we saw recently, oil from 85 to 130, then back to 95, while gas rose to 4.50 or so in tandem, but then stayed high, is an example of the downside sticky. Partly that is the buyer stocked up at high price, and sells at that price until restock. But they refill very often. Big sellers once a day, smaller maybe once a week. Lack of competition can also cause this. If there are few sellers, and they all know each other, and are slow to change on the downside, it could be collusion. But this would unlikely be widespread. Big gas prices also dont change demand much until the price change is very big. The inelastic demand only holds for some price range, but eventually becomes elastic. But not right away. you dont change transport situations until you think the prices will stick.

    But the question again, is what drives oil prices higher. And another issue with this is the futures markets, vs the current production capacity, and the investor side of the equation. Do we really think the supply of oil these past few weeks actually changed that much to make oil go from 85 to 130? No, it didnt. But there were people pricing future oil in terms of what potential oil and other energy might have supply impacts. We also have to factor in what the global growth outlook is, and what the expectations are for alternative energy development.

    Look, it’s silly to try to make this a political football. It is WAY more complicated. Yes, there are political linkages to oil prices, and sanctions, in this case, a political choice, have impacted the short-term price. And if we had also said, now is the time to sanction, AND throw tons of money at alternatives, you’d have a different outcome. But I can assure you, Europe will be doing that, lest they want to learn a painful lesson about electricity prices and their linkages to Russian natural gas. The war has a ways to go, and we can’t say for sure how that plays out with respect to Russia’s economy, nor can we say whether things go off the rails, and the geo-political picture darkens in a different way.

    Prior to Russia’s attack, oil prices under Biden had simply returned to where they were under Trump in late 2018 before they cratered with stock prices as the Fed kept tightening and threatened recession. Once the Fed cut rates, and recession risks fell, oil demand expectations rose, and oil prices started to rebound, but the recovery was cut off via corona.

    Then you have the ARP, still with corona, which sends demand for goods soaring, via fiscal relief and a shift away from services, which shoots up transport demand, and in turn, oil demand and prices. So yes, another political impact, but NOT spending that money gets you lower gas prices at the cost of much higher unemployment. Pick your poison, i think a lot of those people would prefer employed with pricey gas, rather than UE.

    • 0 avatar
      bullnuke

      I’m pretty much with you on this one, Geee. The Middle East wants to keep the price high, the frackers need it high to make money, and the speculators as they have for a century churn the market for higher returns. Pretty much independent of politics or world events except that speculators use these things to increase the churn.

      • 0 avatar
        Jeff S

        The frackers and the oil from Canada that is extracted from the sand need for the prices of oil to be higher otherwise they lose money. These methods of oil production are much more expensive than just drilling.

        • 0 avatar

          @Jeff S Cannot agree with you more. I am not a specialist but I remember that OPEC not that long ago tried to overproduce oil purposely trying to kill frackers whose rise caused panic in oil based dictatorships. Adding to Canada – Russian oil is also expensive and low quality and price of oil killed USSR. The whole future of Russia is hinges on high oil and gas prices. If US brings down oil and gas prices – Russia is done as dictatorship.

          • 0 avatar
            Jeff S

            Exactly the Russian oil and the Canadian oil is much more costly to produce than the Saudi oil which is easier to drill and doesn’t require separating oil from sand. If oil prices stay high you will see the Saudi’s increase production to reduce the profitability of fracking and extracting oil from tar sand. It can take anywhere from 6 months to years to get a drilling rig which most are leased with crews. If there are not enough drilling rigs available then more have to be built and it can take a year or more to build one depending on how many are ordered. Planning to drill and extract (produce) oil is more long term. Most oil leases do not get drilled.

    • 0 avatar
      FreedMike

      @geee:
      “But I can assure you, Europe will be doing that, lest they want to learn a painful lesson about electricity prices and their linkages to Russian natural gas.”

      Anyone who wonders why Europe is moving to renewables should read that sentence twice. It isn’t politics of any “wing” – the plain fact is that Europe has been far too dependent on outside sources for its’ energy – first the Arabs, now the Russians. And this is nothing new – Hitler invaded Russia in large part to take its’ oil reserves. Energy has been a political destabilizer in Europe for too long, and I think they’re sick of it, as they should be.

      • 0 avatar
        bullnuke

        Freed – This is why my son and I spent time in the Persian Gulf over the years. It had a great deal to do with oil each time – my first time sitting at Point ASH (Arabian Sea Holding) in ’74 spinning in 5nm circles for weeks, me again in ’86 again spinning circles off the Straights of Hormuz, my son and I in ’91 in the Persian Gulf Unpleasantness Part I, and my son again in 2003 for the Persian Gulf Unpleasantness Part Deux. It wasn’t oil for the US that was the concern as we had plenty for our needs and exported oil during these periods – the Europeans were very, very interested in that oil for themselves. My son and I missed that Libyan mess which, once again, was European inspired. And, of course, the speculators as always.

        • 0 avatar
          FreedMike

          @bullnuke:

          Historically, Europe has been far more dependent on Middle Eastern oil than the U.S. is. And now they’re dependent on Russia. And, as you say, we get drawn in mainly to keep them from getting bushwhacked economically. And, yet, Americans whine about these guys wanting to create a different type of energy system? Awfully short-sighted, if you ask me.

          • 0 avatar
            Lou_BC

            “Historically, Europe has been far more dependent on Middle Eastern oil than the U.S. is”.

            1953 coup against Iran’s elected Prime Minister Mohammad Mossadegh was initiated by the British because Mossadegh was going to nationalize oil. England lost their sh!t over this but were caught trying to foster a coup. The Iranian government trusted the USA which was unfortunate since the USA took over from the Brit’s and caused the coup. Oil benefits went to the USA now as opposed to Europe.

      • 0 avatar
        Jeff S

        @FreedMike–Europe is more vulnerable than the US and Canada. Fossil fuels are an environmental issue but as you stated above the main impetus to moving to renewables is their vulnerability of being too dependent on outside sources of energy.

    • 0 avatar
      sgeffe

      All good points.

      But what was the catalyst in 2000 that started what we now know as the several dimes-worth of fluctuation in the cost at the pump that you see in a typical week when there’s no major outside forces—like the Ukraine situation, or a hurricane in the Gulf of Mexico impacting supply? That was when oil started to be commoditized like wheat or corn, correct?

    • 0 avatar
      Jeff S

      @geee–You covered oil prices for the most part. Demand does play some what into pricing in that the commodities market does take increased demand for gasoline and diesel along with current supply, ability to increase supply, global conflicts and any other things that could effect global supply. Anytime someone invests in a venture such as producing oil a lot of capital is expended and most of the time drilling for oil you will hit a dry hole. Very risky but not as risky as in the past because the technology to find oil is much more advanced than it was 20 or more years ago. Additionally fields that had low volumes of predicted reserves and could not be produced in the past because of cost or the lack of technology to produce can now be produced. Still a risky business but much less risky than in the past but very expensive.

  • avatar
    FreedMike

    I’d say there are a hundred real reasons, but the main one is this: prices are based on speculation, not on actual supply and demand.

    I’d also say that this “system” is propped up by the people making money on all this paying off elected officials to keep things the way they are.

    Two excellent reasons to a) move away from commodity-based forms of energy, and b) end politician payola.

    • 0 avatar
      Jeff S

      @FreedMike–Exactly you have summed this up better than anyone. Oil as well as wheat, corn, soybeans, lumber, and pork bellies i.e. bacon are commodities traded in the futures market. This is what is the free market in that it is an openly traded commodity based on what those who buy these futures believe what will happen in the future. As for politics we have the best political system that can be bought and with our system it is expensive to fund political campaigns so those who contribute the most get the ear of those politicians they support through financial contributions. We can argue all day about the pros and cons of commodity trading but that is the system that we currently have and a lot of money is made and lost on speculation of commodities.

      I don’t believe it is bad to make money as much as there needs to be more rules on commodities. As for funding political campaigns it ideally it would be better to have a shorter period of time for campaigns to be run and to take the corporate funding out of campaigns but that is dependent on our elected officials to change that and most of them are too dependent on that funding (addicted). The only way campaign funding will change is for people to demand the change.

  • avatar
    deanst

    It’s not really rocket science. It’s a globally traded commodity that has inelastic demand. You essentially take out one of the biggest producers (Russia) and the price has to rocket higher before anyone makes any change in their demand pattern.

    You can say Biden’s policies have no major impact right now, but he has been warned – he doesn’t want to make it easier for stable countries like Canada to be in a position to supply more in times of crisis, nor does he want to grow domestic supply. We can hope all we want about green alternatives, but they are not sufficient at the moment. The next supply disruption is 100% Biden’s fault. Perhaps he should read some Talib and anti- fragility.

    • 0 avatar
      Jeff S

      No commodity is completely inelastic with the exception of water. You can cut down on the amount of driving and you can buy either an EV or a more efficient ICE vehicle. You have the right to buy and drive what you want but you can also choose a more efficient vehicle to reduce the amount of gasoline or diesel that you use. Domestic supply will grow when the price of oil goes up and stays up otherwise the risk to drill and produce oil makes it not feasible especially when the price goes down over a period of time. The President has little effect on drilling and producing oil and gas on land that is not federally owned that is more dependent on state regulators. As for Canadian tar sand oil we are still importing that but most of it is refined in coastal US refineries and the refined product is exported but having said that it is better to import Canadian oil than to import Venezuelan oil. Even if we produce more oil and import more Canadian oil product is still limited by refinery capacity. The oil has to be refined to get more gasoline (low sulfur reformate as it is called in the industry) and diesel (Number 2 fuel oil as it is called in the industry). The last major new oil refinery built in the US was in the mid 70s. Biden can release more oil from the government stockpile which he has requested. Biden and Congress can vote to open up more federal land for oil and gas exploration but they have little to no control over land that is private or state owned.

  • avatar
    Greg Hamilton

    Thanks to recession I’m back on my feet again.

    The bank took my car.

  • avatar
    probert

    Oil companies are making record profits. The last time the cost/barrel was at this level, gas cost about $3.60/gallon – today it is around $4.60. Some would call this profiteering, some smart business, you like the “free market” – live with it. A nice thank you for their massive tax breaks.

    For all the whining – there are the usual suspects making a whole ton of do re mi. They whine to get donations from the marks, they profit on the other end with investments and pro oil legislation, and so it goes.

    • 0 avatar
      Daniel J

      This drum beat again? Profits mean nothing. What are the margins? They could have record profits but an even lower margin, which is an even worse place to be. These companies typically see 10 to 15 percent margins.

      For reference, Walmart sees 25 percent margin. Amazon last year was in the 40 percent range.

      Point is? Amazon and Walmart bend people over far more than the oil companies.

    • 0 avatar
      Art Vandelay

      Your take is fine. On the flip side, when you can no longer afford gas don’t come crying to me for another stimulus or suspension of any fuel taxes…get your kiester on that bus because no matter who your party is, you voted for this. You can sulk and blame the other guy during your bus ride.

    • 0 avatar
      28-Cars-Later

      “you like the “free market””

      Yeah that would be nice but we don’t have that, we have a quasi-centrally planned economy and crony fascism.

  • avatar
    EBFlex

    “Now Yahoo! Finance columnist Rick Newman…”

    And that is where all credibility was lost.

  • avatar
    Tele Vision

    Macroeconomics and global supply and demand are all well and good as explanations for massive and sudden increases in pump gas prices but pure profit has its place, too: Here in Alberta our embattled Premier announced that his government will drop the provincial tax on gasoline and Diesel on April 1st, provided Brent maintains its current value. This tax amounts to about $0.13/Litre. Gasoline and Diesel immediately shot up by a fantastically similar amount overnight – weeks before the proposed tax cut.

    That ain’t speculation or market adjustment or a barge bumping into a rig in The Gulf Of Mexico.

    That’s pure profit.

    • 0 avatar
      Daniel J

      At what margin? This old trope again?

      • 0 avatar
        Tele Vision

        No trope. Nice knee-jerk, though.

        ‘Premier Jason Kenney made the announcement on Monday, noting that the full elimination of the provincial gas tax will be activated when the price of West Texas Intermediate is above $90/bbl. When the price of WTI is lower then $80/bbl the fuel tax will be in place.’

        https://driving.ca/auto-news/local-content/alberta-to-temporarily-drop-13-cent-a-litre-gas-tax-to-provide-some-relief-at-the pumps#:~:text=Albertans%20will%20receive%2013%2Dcents,pumps%20starting%20on%20April%201.

  • avatar
    CaddyDaddy

    What’s with the Woke Volvo ads. The anorexic model chick with pencil arms wrenching on the Volvo. oh wait…. yes, It’s Volvo. If you really want to know why gas prices are so high, it’s because you are showing up at the pump, putting in your card in the reader and buying gas. No demand, the market will collapse. Just one year ago Wyoming Sour they were paying you to take it.

    • 0 avatar
      FreedMike

      The problem is this, CaddyDaddy: we can’t just refuse to buy their stuff because there’s no real alternative to it.

      Given that, I’d say the bigger problem here is that the energy-delivery system for transportation has no real competition. It it did, then you can bet your bottom dollar that “we’re gonna jack up gas 40% because we can” isn’t gonna fly.

      Therefore, the free-market answer is to build alternative energy-delivery systems, like electricity, and generate that electricity from things that can’t be commoditized, like the sun, or wind, or hydrogen.

  • avatar
    notapreppie

    You have your definition of Occam’s Razor wrong.

    It’s not “the simplest explanation” it’s “the explanation with thew fewest assumptions”

  • avatar

    the plan is to force electrics. the 100,000 plus trucks parked all over the midwest under the guise of no chips will be crushed. evil has no end until we stop it.

    • 0 avatar
      Jeff S

      Not really its more like the speculation on oil and the incompetency of the auto makers to ensure they have adequate supply of chips to make vehicles. Just in Time saves money and makes for less waste and more efficiency but there is no room for any interruptions in supply. When car manufacturers cancelled orders for chips due to a decrease in demand the chip manufacturers sought business elsewhere to make up for the loss of demand and the demand was for newer and more capable chips that increased their profit margins. This is more a matter of incompetency than a planned conspiracy.

      • 0 avatar

        I respectfully disagree. this is a manufactured crisis not a manufacturing one.

        • 0 avatar
          Jeff S

          I disagree having inside knowledge of how the Government operates they are not that competent to conspire to force people into EVs. Biden and some of the Democrats might want the US to go EVs but the public will buy what they want and for the most part people want their ICE vehicles especially the big pickups and suvs. What a politician says and what actually happens are not the same. The auto companies themselves are run by mostly incompetent people who are mostly interested in their next promotion. I doubt that most auto companies want large ICE pickups and suvs to go away the profit margin is too great and there is little risk as long as fuel prices and interest rates do not go up too much.

    • 0 avatar
      FreedMike

      Right, all those pickups that the automakers spent money on producing will get crushed…because of some evil woke green agenda.

      I think that would make sense to me after about the sixth shot of Jack Daniels.

    • 0 avatar
      28-Cars-Later

      The super expensive ones no one can afford and have super high build costs?

      • 0 avatar
        FreedMike

        No one can afford trucks anymore? Come on…they’re selling every one they can make.

        • 0 avatar
          28-Cars-Later

          But at a profit? If not and there are no profitable cash cows to subsidize EV… hmmmmm…

          • 0 avatar
            FreedMike

            Yes, at a profit. Have you seen the earnings reports for Ford, GM and Stellantis?

          • 0 avatar
            28-Cars-Later

            I have not but am highly skeptical. I did read a quote from Jim Farley that by assembling Mach-E in Mexico it would allow for a profit but he didn’t elaborate. I also know in the past the golf carts have been very unprofitable, IIRC Ghosn claimed in 2015 they finally were able to slightly profit on the Leaf but they were not expecting that trend to repeat every year.

        • 0 avatar
          Jeff S

          They are slowing down a little where I live especially the used ones that are 1 to 3 years old. The new car dealers around where I live have a few more full size crew cab pickups on the lot than they did but little if any suvs, crossovers, or cars. Having said that I doubt we will see a glut of pickups anytime soon. I think the longer gas prices stay high you will see a slow down in large pickups and suvs but if gas prices go down then you might still see steady demand unless interest rates escalate.

  • avatar
    SCE to AUX

    Gas prices are academic when you drive an electric car.

    • 0 avatar
      mcs

      @SCE

      Did you see this article & scientific paper? While it’s just on paper now, it dispels the myth that the laws of physics prevent an EV from fueling faster than a gas car. Theoretically, it could be faster.

      https://www.sciencedaily.com/releases/2022/03/220321091916.htm

      • 0 avatar
        SCE to AUX

        @mcs: Fascinating article, but I admit that I don’t understand the difference between parallel charging and quantum charging.

        They hint that a practical challenge would be the delivery of so much energy in a brief time. “121 Gigawatts” comes to mind. :)

        But such a breakthrough would be awesome.

        Since gas stations dot the landscape, and every one of them has electricity, in theory most could be converted to charging centers.

      • 0 avatar
        SnarkIsMyDefault

        The day that is true at an “I can afford that!” price every complaint about battery cars goes away and we buy them like mad. People will also be laughing at the old slow chargers..

        Just be aware it is currently Pie-In-The-Sky as many wonders just don’t scale up in the real world. How a car sized battery takes the heat load of a 3 second charge comes to mind.

        A cargo 747 full of frozen pies on a landing approach is also “pie in the sky” so we’ll see how long this takes, if it happens.

    • 0 avatar
      FreedMike

      Agreed 100%. If I owned my own home, I’d install a solar roof, buy an electric, and tell the oil cabal to go pound sand.

      The reason the guys behind the current transportation energy system get away with this kind of nonsense is that they don’t have any competition. No wonder they’re so dead set against renewables and EVs.

  • avatar
    pmirp1

    Jan 2020 – Gas Price, $2.20

    Jan 2021 – Gas Price, $3.20

    Jan 2022 – Gas Price, $4.20

    The constant is Branden. There was no war in 2020 or 2021.
    Branden caused inflation by insisting on giving people handouts for Covid. People quit work as they had money. Things became scarce. Prices went up. I mean be serious, Branden was even trying to pass another over trillion dollar bill name build back better that he could not pass. The man has no clue. Fed kept buying bonds and injecting money into economy after it was clear last year Covid was over. Yet Branden and his cronies wanted us to stay home again because of Omicron.

    Remember how Branden used to say inflation is Transitory.

    Here is my coaching to people. Diversify. Don’t own just same thing. Have stuff (Homes and cars and land and antiques).
    Have stock.
    Have cash and gold.

    That’s the way to overcome.

    Gas prices will go down when inflation goes down, when Branden backs off from failed policies to appease greenies (stopping pipelines, stopping oil and gas exploration in national arctic refuge, or stopping exploration because Indian reservations,). Branden is a failed president.

    It is always the case. Carter caused inflation. Branden caused inflation. It takes a Republican to fix this mess and stop giving people free handouts, or pay their rents. Make people work for their money.

    • 0 avatar
      redapple

      Branden or the Minister of Propaganda, Jen SuckMe said, Spending more money on Build Back Better Destruction will actually LOWER INFLATION.
      Ok. Got it.

      2- Massive increase in the M2 money supply = higher inflation
      3- Inflation only comes down once you raise interest rate to a higher rate than the inflation.

      Dont worry, we have a feeble infirmed leftie in charge. Heels up
      ( Chlamydia Harris ) is in the #2 slot. ALL IS WELL. :(

    • 0 avatar
      Astigmatism

      Your own post shows that gas prices went up by $1 in the last year of the Trump administration and by $1 in the first year of the Biden administration, and “The constant is Branden”?

      Look, I want to be polite and respectful of people’s arguments, but you gotta help me out a bit here.

      • 0 avatar
        FreedMike

        @Astigmatism:

        Given the fact that he can’t even get basic facts straight – i.e., “the COVID bailouts began under Biden” – there ain’t much to respect. Just ignore him and move on.

    • 0 avatar
      teddyc73

      Finally someone in the comments who gets it!

  • avatar
    Sundance

    The reason for high gas prices is that the big companies noticed that we are driving around at high prices the same as on low prices. So why should they get the prices down again?

  • avatar
    Master Baiter

    People claiming profiteering have to explain what happened to the profiteering when the gasoline price was low.

    It’s pretty simple: In the short term, oil price is based on future expectations of price. Call it speculation if you will, but there are thousands of traders who are paid to study this stuff. If you think they are irrational or stupid, simply bet against them and make a fortune. Good luck with that.

    In the long term, the price is based on supply and demand.

    As others have said, gasoline prices are sticky downward: When the oil price jumps, gasoline prices jump immediately, but when the oil price falls, it takes longer for the effect to be seen at the pump. This has always been the case.

    • 0 avatar
      FreedMike

      Explain to us, then, what “future event” in oil/gas supply justifies a 40% increase in gas prices, when in fact, oil production and gas production are both up right now.

      Have at it.

      • 0 avatar
        Art Vandelay

        Yawn. Pay up or get up early and catch that bus.

        • 0 avatar
          28-Cars-Later

          According to what I just read diesel supply is becoming a problem. I ***hope*** Demshivik logic does not prevail and available supplies are routed toward essential trucking/trains limiting wasteful bussing. The 81 million can walk or ride bikes off peak hours.

      • 0 avatar
        Master Baiter

        “Explain to us, then, what “future event” in oil/gas supply justifies a 40% increase in gas prices…”

        Do you have a reading comprehension problem?

        I explained what influences price. I made no claim to being able explain why oil is $112/barrel instead of $90/barrel or any other price for that matter. I said there are expert traders who study this stuff for a living. If you think they are wrong, just sell oil short and make a killing.

        This completes my engagement with you FreedMike. I know from prior interactions that you are an irredeemably hopeless fool.

        • 0 avatar
          FreedMike

          “I made no claim to being able explain why oil is $112/barrel instead of $90/barrel or any other price for that matter. I said there are expert traders who study this stuff for a living. ”

          So…you have no explanation aside from “expert traders think so.”

          Fifteen years ago, “expert traders” said that it was OK to sell trillions of dollars in fraudulently originated mortgage loans from the likes of Countrywide.

          Those “experts” got rich off this and f**ked the rest of us, and the global economy at the same time. Sound familiar?

          • 0 avatar
            Art Vandelay

            Did you purchase too much house or buy a bunch of homes to flip? Because I don’t know anyone that saw their home as where they live instead of a piggy bank to be used to generate profit that had any issue in 2008.

          • 0 avatar
            FreedMike

            @Art:
            It wasn’t just 2008 – the crisis went on for years after that. I know – I’ve been in the mortgage business for over 20 years now.

            The dingbat flippers and speculators weren’t the only ones who got hurt – practically everyone who owned a house saw its’ value decrease dramatically. In all, trillions of dollars of peoples’ net worth evaporated because of the irresponsible lending practices lenders were engaging back in that drove market prices higher. Hundreds of thousands of other people – realtors, construction workers, people in the mortgage business (me included), the employees of the banks, and lots of other folks lost their jobs.

            You might ask yourself why lenders like Countrywide or WaMu were able to originate fraudulent loans, and it’s simple: they had investors to sell them to. And the “traders” I mentioned above were the people who told the investors that the loans were “safe” to purchase.

            The lenders and the traders made out like BANDITS. Everyone else – including pretty much anyone who owned a home – suffered. They did it all with political cover from elected officials from both parties who were bought off to look the other way. Again…this sounds awfully familiar, doesn’t it?

          • 0 avatar
            Art Vandelay

            The value of my home dipped for maybe a couple of years. It rebounded quickly. And didn’t some of those lenders that “made out like bandits” and those investment houses go bankrupt?

            I got my first home while banks were playing fast and loose. All you had to do was pay the freaking mortgage to come out on top.

  • avatar
    Art Vandelay

    This is what the majority of people voted for. Pay it or don’t…your transportation woes are not my problem. Maybe in the future Presidential debates should focus on more than the 1 current hot topic so people can make informed decision factoring in things like energy and foreign policy.

    As I said in a prior article, take the enivetible handout that will be forthcoming from all this, buy yourself a decent set of noise canceling headphones and enjoy your bus ride.

    • 0 avatar
      28-Cars-Later

      “voted”

      • 0 avatar
        SCE to AUX

        Yes – voted – in the most closely-monitored presidential election ever.

        Arguing otherwise gives credit where it is not due. It was foolish in November 2020, but is blindly cultish now.

        Please save yourself and stop it.

        • 0 avatar
          Art Vandelay

          I believe the election was legit. Additionally Joe Biden’s energy policy has been exactly what he said it would be during his campaign. Therefore I don’t want to hear anything about “stimulus” payments, fuel tax suspensions or any of that nonsense. If you can’t afford to operate a vehicle because the guy you voted for is doing what he said he would do I have little sympathy and no desire to help you deal with it via another handout.

        • 0 avatar
          28-Cars-Later

          “the most closely-monitored presidential election ever”

          Quis custodiet ipsos custodes?

          • 0 avatar
            SCE to AUX

            Q: “Quis custodiet ipsos custodes?”

            A: The press, the internet, the courts, the Constitution and every amendment to it.

            The Lie you believe means that the right-wing press has no voice, the internet doesn’t exist, the right-wing courts were duped, and the Constitution is annulled – and it all happened in 2020 but not 2016.

            I have more confidence in our freedoms than you do.

          • 0 avatar
            Art Vandelay

            So the problem with decrying those who say there were shenanigans in 2020 is that you did the same thing in 2016 and spent the next 4 years #RESISTing.

            This is sort of a monster of your making.

    • 0 avatar
      Jeff S

      I took the park and ride bus to work continually for almost 26 years. My employer paid for it and it dropped me off 1 block from my work. Unless you are commuting downtown for work it is much harder to take a bus to run errands because our transportation system outside of some major cities is not set up for anything but commuting back and forth to work in downtown areas. Art since you bring up taking the bus have you ever taken a bus or any mass transit to work? If you haven’t then you should not comment on something you know little or nothing about.

      • 0 avatar
        Art Vandelay

        No, I havent nor do I intend to. As I have no desire to take the bus I would be unlikely to vote for politicians that advocate policies that would force me to do so.

        I don’t care how you get to work. It is none of my issue or concern. Maybe read where the candidates you support stand on energy policy if you don’t like mass transit and lack the income to buy expensive fuel or an EV. Either way, I don’t give a $#!+. Your problem. not mine

  • avatar

    Good old fashioned profiteering….spurred by a bump due to the invasion of Ukraine. It isn’t “the President”, or “drilling”, or, or, or.

    Greed. Suddenly all my low price stock is stepped up to high price. Always a surprise how fast prices go up, and how slow they ramp back down….see also Airline and Uber fuel “surcharges”

    • 0 avatar
      Master Baiter

      “Good old fashioned profiteering…”

      Funny how profiteering is “old fashioned”, but it never occurred to the oil companies to profiteer in March of 2019 when gas was $2.70 per gallon.

  • avatar
    Dartdude

    This administration has effected prices around the world. By limiting the leases on federal land. Biden is capping off the supply America could produce thus making us smaller oil producer. Biden wants his green new deal and to do this he has to drive the cost of energy so that renewable sources can be competitive. He has to pay back all his donors for supporting him. I will bet there are alot of people in congress with ties to green energy.

    • 0 avatar
      Astigmatism

      You realize that US oil production has increased under Biden, and that more than half of all federal land subject to oil and gas production leases is sitting unused, right?

      • 0 avatar
        SCE to AUX

        Don’t confuse an agenda by introducing facts.

      • 0 avatar
        Art Vandelay

        He is doing exactly what he said he would do with respect to energy. Those oil companies see no incentive to utilize those leases with what they see as harsh regulatory environments ahead.

        Anyway, suck it up…you voted for this. With respect to energy policy Biden is one of those rare examples where a Politician kept their promise. If it is creating a hardship for you then maybe take that into account when you hed back to the ballot box.

        Or just demand another handout.

        • 0 avatar
          Astigmatism

          “He is doing exactly what he said he would do with respect to energy.”

          Well, no, he’s not, seeing as “The federal government has been issuing oil and gas drilling permits more willingly than it did during President Donald Trump’s first three years in office, and it could be issuing even more if the oil and gas industry weren’t leaving many current leases undeveloped.”

          https://news.yahoo.com/us-oil-and-gas-permitting-has-increased-under-biden-data-show-223504727.html

          And what does an alleged “harsh regulatory environment ahead” have to do with anything? They have the leases today, they can drill today. If they want to let those leases expire unused because, say, Keystone XL got nixed, then they’re dumber than they look.

          “Anyway, suck it up…you voted for this.”

          Cool. It cost me $9 to fill up by EV6.

          • 0 avatar
            Art Vandelay

            Because obtaining the lease is a tiny part of the cost of producing the oil and nobody wants to risk the rest of the cost (you know, the trivial and totally non capital intensive bits like obtaining the rigs, hiring the workers, setting up distribution and logistics, fighting 5he inevitable lawsuits…those little things) when the administration has stated they support policies that would put them out of business.

            Glad you arent worried. Neither am I so how about you don’t come to me for another stimulus or something and keep paying your fuel taxes then since all is well.

      • 0 avatar
        Dartdude

        Don’t use any yahoo news articles as fact. They always twist the truth. Kid runs in the street and bus runs him over. Yahoo interpretation Bus runs over kid.

        • 0 avatar
          FreedMike

          Here’s an article from Forbes, if you find that more credible. It basically says the same thing as the Yahoo article.

          https://www.forbes.com/advisor/investing/high-oil-prices/

          The problem is the worldwide price of oil.

  • avatar
    MitchConner

    Look, the Biden administration is dominated by California money — with most of that coming from Silicon Valley. Those people have more money than they know what do with — and even though they were smart enough to make it in tech — are basically detached from reality and have no ability to relate to the middle or working class. Just look at their state. It’s an oppressive, high tax, high cost pigsty rocketing toward third world status.

    California, for years, has been relentlessly harassing any business related to fossil fuels. From restricting production and refining to slapping every tax and fee onto gasoline they can think of — such as a surcharge for carbon credits that do nothing, their undisclosed strategy, for obvious political reasons, has been to raise the cost of fuel to the point where people either (a.) suffer and pay up, (b.) are forced to carpool, ride a bike, hitchhike, walk, hop on a unicycle (like some dope in Palo Alto used to do), or take awful mass transit to work, or (c.) buy an electric car powered by sunshine, wind, and the golden urine milked from unicorns.

    Now California’s strategy is being foisted onto the American people. Biden immediately shut down the Keystone XL pipeline. While that has nothing to do with the situation right now — it’s symbolic as that fool of a president, who has ZERO private sector experience, has allowed himself to be steamrolled by the minions shoehorned into offices like the EPA, etc. to restrict drilling at every opportunity, force lenders to withhold funds to companies engaged in fossil fuel production, and fail to rescue producers who were crushed by the collapse of oil prices when they essentially went to zero.

    Meanwhile, the Saudis and other leaders of oil rich countries in the Middle East won’t even take his calls asking to boost production — which is a completely idiotic idea to begin with — so now he’s tap dancing with the Iranians and Venezuelans — a strategy right out of that spineless weasel Obama’s playbook.

    As for individuals like Samantha Gross at Brookings, she’s a Stanford and Berkeley grad (a.k.a. book smart goofball) with ZERO hands on energy sector experience — so any take she has should immediately be flushed. Same with morons like Severin Bornstein of Berkeley — another fool the media can’t wait to go to for his take on energy prices.

    Can’t wait for the midterms. Team Donkey out. People with a lick of common sense in. Let the investigations into Joe and Hunter’s shady business dealings, the media’s burying of stories like Hunter’s laptop before the election, and Silicon Valley’s censorship begin.

    • 0 avatar
      Art Vandelay

      We should tell the Saudis to play ball lest we totally pull out militarily and leave them to deal with the radical elements of Islam whose hatred for America is only eclipsed by their hatred of the House of Saud.

      Maybe the Russians will…oh. never mind. Better call Bejing.

      If we are going to have stupid energy costs, may as well screw over those that have been trying to bend us over a barrel for over half a century.

    • 0 avatar
      SCE to AUX

      1 in 8 Americans lives in California, so they deserve to have a powerful influence on policy.

      And that influence predates Mr Biden’s administration by decades.

    • 0 avatar
      FreedMike

      Lots of complaints about Biden and California here – in other words, the typical so-called “conservative” argument – but zero explanation for why gas prices have gone up 40% when oil and gasoline production are, in fact, both up, and have been for some time.

      You say to use a lick of common sense. Okay. Here’s mine: for gas to be up 40%, common sense dictates something catastrophic must be happening on the supply side. And yet, the supply side is up. Common sense is failing me here. Help me out.

      • 0 avatar
        MitchConner

        Go back and reread my post. That’s all the help you need.

        BTW, production isn’t up: https://www.eia.gov/petroleum/production/

        • 0 avatar
          FreedMike

          @Mitch:
          That chart is for crude oil and natural gas. Here are the pertinent figures for crude oil and gasoline:

          US Field Production of Crude Oil (thousands of barrels per day):
          https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=m
          January 2021: 11056
          December 2021: 11567

          Finished motor gasoline (thousands of barrels):
          https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFUPUS2&f=M
          January 2021: 7666
          December 2021: 8949

          As I said…production of oil and gasoline are both up.

  • avatar
    Art Vandelay

    I’m just glad W and Cheney fought all of those “wars for oil” that the so called anti war left in this country spent 2 decades whining about. You spent 20 years saying “Where are the WMD’s?”. Fair enough. Now I ask you, “Where is the oil?”

    • 0 avatar
      SCE to AUX

      I’m probably the only one, but I’ve never believed those wars were for oil.

      A real war for oil was Japan’s march through the Pacific in the 1940s.

      • 0 avatar
        FreedMike

        Hitler’s invasion of Russia was also motivated by oil.

        I’d say that the first gulf war was about oil – Iraq taking Kuwait (and eventually, Saudi Arabia, which was next on the hit list) would have put Saddam Hussein in charge of a huge chunk of the world’s proven oil reserves. That guy was NOT the one you wanted in that position.

        • 0 avatar
          28-Cars-Later

          The more I read the more I think Saddam was set up. He was coming after the Sheiks and their illegal slant drilling operation on his southwestern border. I believe his importance was diminished after his unsuccessful Iran-Iraq war and the Sheiks had far more political influence in the West than he did. He became viewed as “mad dog” before the initial 1990 invasion (I doubt the Osirak stunt helped either but by 1990 nobody may have cared anymore).

          I once read an interview with James Baker -who took the nation to Defcon 2- and was quoted to the effect of “we could do what we wanted in the [Middle East] region and the Soviets were not going to interfere”. The Gulf War seems to have had a side attraction of testing Soviet response during their (ostensible) collapse period.

    • 0 avatar
      Astigmatism

      “Now I ask you, ‘Where is the oil?\'”

      Right where it’s always been: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=m

      • 0 avatar
        Art Vandelay

        Shouldn’t we have more? I mean we fought a whole war and took over a country for it, right? At least that was what your little signs said when we were flying over there.

  • avatar
    whynotaztec

    I understand why we talk gas prices on this site. Not sure however why the MSM is so exclusively obsessed. The food inflation that is coming will make $5 gas seem like a mere annoyance

    • 0 avatar
      FreedMike

      The press loves fresh ink. Gas prices are pretty fresh. High food prices will be fresh too.

    • 0 avatar
      Art Vandelay

      No worries…more handou…err…I mean stimulus checks will be inbound

      • 0 avatar
        jkross22

        Art, you think so? I’d be surprised if that were to occur. The general public has no lobbying group representing our interests to the people supposed to be representing our interests.

        • 0 avatar
          Art Vandelay

          My interests would be to not have my taxes increased or have my nation incur more debt because a bunch of people elected a dude who did what he said he’d do and now gas costs more than they can afford.

          And they have a powerful lobby…the desire to get elected. Some people buy policy, politicians on the other hand buy votes. Midterm polling suggests one party is going to need just such a hail Mary.

  • avatar
    slap

    I live in the DC area. The Trucker’s Convoy people are upset that so many drivers are giving them the finger and telling them to go F themselves.

    I was out on the Beltway two weeks ago – I saw just 6 pickup trucks flying flags. I was out there again today and saw none.

  • avatar
    FreedMike

    By the way, in case anyone’s still wondering why more oil production isn’t happening, here’s some data based on a survey done by the Dallas Fed of actual oil producers:

    https://www.dallasfed.org/research/surveys/des/2022/~/media/Images/research/surveys/des/2022/2201/des2201c5.png

    Almost 60% of them said that the key factor was pressure from their own investors and shareholders to keep oil prices high.

    No one’s constraining their production – they’re doing it on their own.

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