What Is the Real Reason for High Gas Prices?

When gasoline costs spike, we argue.

It is the present-day president’s fault. It is the preceding president’s fault. It is about the Russian invasion of Ukraine, and on and on.

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

Newman claims that though sanctions versus Russian oil participate in a part, oil organizations are unwilling to produce more oil because if they overproduce, they’ll see their revenue sink.

He factors to an oversupply problem that existed from 2015 to 2020, and how gains cratered during that time, just before the coronavirus pandemic produced the circumstance even worse.

There have been some phone calls for the Biden administration to allow for for a lot more drilling, but Newman cites a plan qualified who suggests that it will not make any difference: “The quantity of oil and gas leasing the Biden administration has carried out makes definitely no change in the sum of oil and fuel we’re generating correct now,” reported Samantha Gross, director of the power safety and local climate initiative at the Brookings Establishment.
“These matters take a although. The market 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 making it possible for too significantly drilling, and that most drilling usually takes spot on personal land — that means there’s no need to have for federal permits anyway.

I’m not defending or critiquing the admin right here, nor am I evaluating Newman’s statements. While I/we do that often in this article, I am not very well-versed in the oil industry plenty of to genuinely know if he’s correct or not. But I did come across the piece intriguing as a possible explainer for what’s going on with fuel costs.

I’m also a fan of Occam’s Razor — the simplest clarification is the most very likely. It appears to me that for all the hullabaloo about gasoline costs, it is most likely that straightforward enterprise realities, and not political decisions, are the trigger of superior selling prices at the pump.

Newman may possibly or might not be right, but it’s foodstuff for thought.

[Image: Shutterstock.com/ALPA PROD]

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