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  • Paola Ayala

Gas prices up, the reason? More confusing than you’d think




California gas prices are record-breaking, with the average person paying $4.60 per gallon. That's a little more than a dollar than the average national price, $3.17 per gallon. Many people are asking the big question, Why? Who do we blame for our lighter wallets after filling our tanks? The answer is a bit more confusing than you'd think.


Throughout the years, gas prices in California have increased and decreased due to environmental changes, seasons, and economic changes. For example, during this pandemic, specifically, the March shutdowns significantly impacted gas demand and supply. People were ordered to stay at home, and many people stopped needing gas to fuel their cars that they weren't using. Now that more people are vaccinated, restaurants and entertainment are being opened back up, and people are going out more. This Thanksgiving, it was estimated that one out of every five Californians drove 50 miles or more, a significant difference from records during the shutdowns in March for spring break. More people are returning to work, going to and from and what we are seeing is an increase in the need for gas. The problem is how fast this happened, and the imbalance there now is between the supply and demand in oil. The problem isn't a shortage of oil but a delay in production time.

Another example would be during the Great Recession in 2008 and 2009. Gas prices skyrocketed during the middle of the year and drastically decreased by the end. During holiday seasons, we usually also see a spike in prices as more people use vacation time, get time off from school etc., many more people use this time to visit family, friends, whoever.



Many Californians are cancelling their road trips this year because of the high prices and are questioning if this will continue to be the new normal. All over the bay, you will often find long lines of cars at a gas station with a $4.30 per gallon price; that's a steal to many. Or you see people waiting until their gas is almost completely gone and time it around the time they pass by a cheaper gas station rather than filling it before it gets too low. It's tactics like this that help some people save a couple of dollars each week on gas now. As a San Franciscan myself, I find it crazy New Yorkers are complaining about gas prices hitting $4 per gallon out there. I can only imagine other states or even quiet cities that aren't even thinking about dropping that kind of money on gas. Of course, wage gaps and other economic factors play a role in the price difference across the country, but it is just so shocking to me, and I am not the only one. The Federal Trade Commission is in charge of "protecting" consumers from fraud, unfair or deceptive practices commonly used in businesses that break the law. In short words, they investigate and sue people who are stealing from people through corruption. President Biden has asked the FTC to launch an investigation into oil companies and whether they engage in illegal conduct. The investigation is still going on. It is obvious California has the highest gas price nationally, but we also have some serious taxes on oil companies that explain the higher pricing. Environmental changes have also impacted California's gas production; heavy rains inundated many oil facilities making production costs higher and making the supply and demand more imbalanced. An imbalance in supply and demand will always mean one or both parties lose, the consumer, the supplier or both. In this case, we are seeing oil companies having trouble with gas production; this causes a delay and an increase in demand. Therefore I can see why oil companies would raise prices. The answer is still a blur, and some blame the governor and tax prices on gas; some blame the president. The answer is different for many.


Thanks for reading and stay tuned for more!


Sources:

https://www.nytimes.com/2021/11/22/us/gas-prices-california.html

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_SCA_DPG&f=M

https://www.gasbuddy.com/go/gas-prices-during-recessions

https://www.usatoday.com/story/money/2021/11/16/california-gas-prices-break-records/8636518002/



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