There’s No Relief in Sight for High Gas Prices
They may break $5 on average
With gas prices averaging nearly $4.50 per gallon, distraught drivers might feel they’re due for a break. But gas prices seem likely to go higher, and maybe break $5 on average, as Russian oil disappears from the market and producers struggle to keep up with demand.
“My expectation is it’s going to get worse for consumers,” Vicki Hollub, CEO of Occidental Petroleum, said at a May 13 online forum sponsored by the Dallas Federal Reserve Bank. “Spare capacity is at a multi-decade low. New production is insufficient to meet demand. Oil is going to continue to stay at high prices and gas prices will stay high, as well.”
Americans who have heard the nation is “energy independent” don’t understand why U.S. producers can’t just open the taps and bring prices down. But “energy independence” is something of a myth. Oil and many other commodities trade on global markets, with prices set by worldwide supply and demand. A supply or demand shock anywhere affects prices everywhere. U.S. drillers also overproduced oil and natural gas for several years, effectively subsidizing low pump prices from 2015 through 2020. Industry executives insist those days are over.
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