Gasoline prices in the United States broke a record in 7 years: why in America fuel prices have risen so much

3 reasons why gasoline prices are so high now, he names INSIDER.

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US gasoline prices hit a seven-year high.

Demand increased as the economy reopened and Americans started driving more.

Meanwhile, supply is limited due to declining US production and OPEC decisions.

Americans are again uncomfortable at gas stations, and this is due to the classic clash between growing demand and limited supply.

An October AAA report showed US gasoline prices hit their highest average level since 2014, higher than at any time since 2014.

And it has gotten worse since then.

Data from the US Energy Information Administration says gasoline prices will rise to levels unseen since the middle of the last decade over the course of 2021.

Prices continued to rise throughout October, reaching an average of $ 8 per gallon on November 3,41.

The reasons for the price surge are textbook supply and demand: Americans returned to driving more heavily this summer as the pandemic subsided, and a combination of domestic supply disruptions and problems in overseas energy markets made oil more expensive.

Demand Rises as Americans Hit the Road Again

Like many other aspects of everyday life, the COVID-19 pandemic has radically changed the way Americans travel.

The blockages and the uncontrolled early spread of the virus have led to travel cancellations and a sharp decline in commuting.

However, by the summer of 2021, Americans were back on the roads.

In the spring of 2020, the number of vehicles on the roads, as measured by the Federal Highway Administration, fell sharply, but in the past few months, highway traffic has returned to what is usually seen in mid-summer.

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This increase in the number of drivers means an increase in the demand for fuel for cars.

Oil production and refining in the United States lags behind

Apart from this growth in demand, there were also some serious supply constraints.

In mid-September, the Energy Information Administration noted that in late August, Hurricane Ida halted a significant portion of the US oil drilling and refining capacity in the Gulf of Mexico.

Although drilling rigs and refineries have resumed operations quickly since then, crude oil inventories remain low, reflecting continued supply shortages.

The EIA said that as of the end of September, oil inventories in Cushing, Oklahoma, one of the main storage facilities in the United States, fell 40% since the beginning of the year.

Other EIA data show that crude oil inventories across the country remain low.

Reducing the supply and reserves of oil on the domestic market, combined with an increase in demand, leads to an increase in gasoline prices.

Energy markets around the world are in crisis

In addition to reducing the supply of oil in the domestic market, foreign oil and energy markets also do not contribute to the development of supply.

According to CNBC, OPEC and other major oil-exporting countries have repeatedly agreed to only a modest increase in production, despite oil consumers such as the United States and India pushing for more exports.

The oil producers' association recently agreed to increase production by just 400 barrels per day in December, after President Joe Biden explicitly called for increased production to curb price increases.

It also shows that the alliance of oil exporters continues to wield tremendous power in the global oil markets, even as the US has boosted production over the past decade and countries around the world are embarking on a shift towards cleaner energy sources.

Broader energy markets also faced supply shortages.

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Natural gas and electricity prices in Europe have skyrocketed, and traders expect oil and other energy prices to rise in the coming months.

Russia, a key supplier of natural gas to the EU, refrains from increasing supplies to the West, keeping prices unstable and high.

If you add up the growing demand in the United States, which is resumed with a reduction in supply in both the domestic and global markets, it is not surprising that gasoline prices are rising.

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