The finger is often pointed at who is to blame for the high petrol prices.
Republicans blame the Biden administration while Democrats say the oil companies are price gougers. Analyst Severin Borenstein of the Energy Institute in Berkeley told CBS News the root of the problem is more complex.
“Most of the increase is due to the rise in crude oil prices, and that’s because global demand has returned quite sharply after the pandemic and supply hasn’t caught up,” he said. “Even before Russia attacked Ukraine, we saw that oil production was lagging. Producers in the United States report having a hard time getting workers to return to the oil fields. They have supply chain issues with parts and equipment.”
Oil companies benefit from price spikes at the pump. In the first three months of the year, Chevron’s earnings rose 33% from the last three months of 2021. Shell’s earnings rose 42%, while Conoco Philips rose 43% and British Petroleum’s earnings rose 51%.
“Oil companies make a lot of money by riding. They sell their oil at market price,” Borenstein said.
According to the AAA, the current national average for a gallon of gasoline is $4.59, a record price.
The high cost of petrol is causing people to reconsider their summer travel plans and limit the use of their vehicles. Borenstein said it could take a while for gas prices to fall as experts predict gas prices could reach $6.20 a gallon nationwide by August.
“I think the reality is that we are in for higher gas prices, certainly over the summer and probably by the end of this year, which may gradually come down. But we’re not even going to see $2 or $3 gas any time soon,” Borenstein said.