Tue. Jun 18th, 2024

Over the last few years, prices have fluctuated in terms of all the basic necessities of life. From food to steel, from wood to energy, prices have been all over the place. Among these is the price we see displayed alongside the road and, at least recently, the sight which has caused many heads to shake and disbelief to become audible in the form of a gasp. Yes, I’m talking about the gas prices, which have risen 48% over the last 12 months. 

As a commuter, I have, like many other Americans, felt the effect of these sharp increases. Now, as I only commute about 20 minutes from campus and I feel more pain than I’m used to, I can only imagine the tug at the wallet of those who commute from Philadelphia, Delaware, or further.

It is no overstatement that gas prices have soared to the highest height in the history of the nation. In Pennsylvania, over the last decade, the price reached a low of $1.86 and just recently reached the pinnacle of around $4.50 — the highest ever. 

Given the recent spike, many Americans have been forced to ask who is responsible for this phenomenon. There is no one person just willy-nilly writing the gas prices and commanding the market. No question about it, the inner machinations of gasoline economics are complex. Policies enacted by the current administration have had an effect on the prices, just as any presidential administration has throughout history. World events, namely the pandemic and the war going on in Ukraine, also play a huge role in the rising price. However, many look to blame the oil companies and claim this increase in pricing has been nothing but price gouging. In addition, some point to individual gas stations as the culprit of targeting consumers with outrageous prices. The prices are more complicated than many realize. Politics, economics and world events all play their own roles. The primary benefactors of this surge, however, are the crude oil producers and the government. Allow me to explain just what goes into the price to fill up your tank. 

When dividing up a typical gallon of gas, there are five primary sections that go into the price: oil producers, refineries, tankers/pipelines, gas station owners and federal/state taxes. According to the Natural Resources Defense Council, in 2012, oil producers made $1.12 profit per gallon, refineries made five cents per gallon, tankers and pipelines made about one cent per gallon, and gas station owners made four-seven cents per gallon. As it stands in Pennsylvania, the state gas tax is 58.2 cents per gallon with a 1.1 cents-per-gallon underground storage facility fee. The federal tax is 18 cents a gallon. This has been the general standard for the division of gas prices, even today. The only factor which has continuously risen has been taxes. 

As time has changed over the last decade, so too has production, shipping and storage costs, thus driving prices to a high rate at a record pace. Over the pandemic, most people were not driving. Gas stations were almost empty throughout 2020 as a result. The gas was still being pumped, the stations were still open, but so few were purchasing fuel.  

With such a loss of revenue from a stagnant period and a sudden surge in demand for oil with society opening post-pandemic, the price skyrocketed. The cancellation of several US pipelines and drilling sites by the Biden administration further affected the decrease in supply which again impacted the price. The shutdown of the Keystone pipeline was a key reason that gas prices rose over the past year. Yes, prior to the war in Ukraine and the consequential ban on oil exports, gas prices were soaring just months into the Biden presidency.  In the cancellation of the controversial Keystone Pipeline, Biden repealed the permit, which had promised to provide over 830 thousand barrels of oil daily to Gulf refineries. This marked a signal to investors that this administration, in opposition to the Trump administration, was preparing for a battle against the fossil fuel industry. 

Critics of the pipeline point to the fact that it would not have brought a halt to the sharp increase in price, given the incompleteness of the project. This much is true, in terms of supplying gas itself, as the pipeline was only 8% finished when Biden made his declaration to cancel it. What is faulty about this line of thinking, however, is the economic viewpoint that is seemingly forgotten. Besides, this would not have been an issue had the Obama/Biden administration not canceled the construction of the pipeline back in 2015. The gas would have already been flowing. The market was shaken by the cancellation of the pipeline by both Biden today and Obama six years ago. When the Trump administration showed support for the project and other similar ones, markets breathed a sigh of relief and prices dropped. 

The idea of a more sustainable source of energy would, of course, be welcome if it could bear the weight that gasoline has shouldered throughout the years. However, since no contingency plan for such an energy source exists, it is not a good plan to cut off a proven self-reliant source of energy, scare future investments, and thus thrust a dagger into the wallets of middle-class and lower-class families.

The hike in gas prices does not exist in a vacuum. World events and geopolitics impact every nation’s gas prices. This is why, when a nation can become more energy independent than others, it is not only going to lower prices in that nation but also across the world. Until the current administration reverses these energy decisions and their stance on fossil fuels overall, the prices will not get better.

Joseph Gill is a third-year English major with a minor in Journalism. JG923276@wcupa.edu

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