What Is the Real Reason for High Gas Prices?

Shutterstock.com/ALPA PROD

Shutterstock.com/ALPA PROD

When fuel price ranges spike, we argue.

It is the latest president’s fault. It is the prior president’s fault. It is about the Russian invasion of Ukraine, and on and on.

Now Yahoo! Finance columnist Rick Newman implies that politics and war aren’t the difficulties, but basic economics are.

Newman states that though sanctions against Russian oil play a part, oil corporations are unwilling to generate much more oil due to the fact if they overproduce, they’ll see their income sink.

He factors to an oversupply problem that existed from 2015 to 2020, and how profits cratered for the duration of that time, before the coronavirus pandemic produced the scenario even even worse.

There have been some phone calls for the Biden administration to allow for for additional drilling, but Newman cites a policy expert who states that it won’t issue: “The amount of oil and gas leasing the Biden administration has completed will make definitely no change in the amount of oil and gas we’re developing appropriate now,” explained Samantha Gross, director of the power safety and climate initiative at the Brookings Establishment.
“These things take a though. The business tends to have a backlog they are figuring out what to do with.”

Newman also notes that the Biden admin has been criticized by environmentalists for allowing for also much drilling, and that most drilling normally takes position on private land — indicating there’s no have to have for federal permits in any case.

I’m not defending or critiquing the admin in this article, nor am I assessing Newman’s promises. Whilst I/we do that from time to time in this article, I am not very well-versed in the oil market place more than enough to seriously know if he’s appropriate or not. But I did come across the piece intriguing as a possible explainer for what’s happening with gasoline costs.

I’m also a supporter of Occam’s Razor — the simplest explanation is the most likely. It would seem to me that for all the hullabaloo about fuel costs, it is very likely that uncomplicated company realities, and not political conclusions, are the induce of large costs at the pump.

Newman may perhaps or may possibly not be proper, but it is food for imagined.

[Image: Shutterstock.com/ALPA PROD]

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