by Mia DiFelice
Editor’s Note: A version of this content originally appeared on Food & Water Action’s website (our affiliated organization) at an earlier date.
It’s the hallmark experience of summer 2022. You’re rolling down your local street, heat waves shimmering off the asphalt, breeze blowing through open car windows. But when you stop at the light, an impossible number catches your eye. Huge and stark, the sign proclaims “REGULAR: $4.95.” It was $4.70 just last week!
Gas prices have been rising for months. Experts first pointed to an unexpected, rapid demand as global COVID lockdowns lifted. Oil and gas corporations saw bankruptcies and negative gas prices in the worst months of the pandemic. But rather than respond to returned demand, industry titans doubled down on profits.
When Russia invaded Ukraine, countries around the world began sanctioning Russian oil. Eye-watering gas prices have piled onto a seemingly endless list of crises and pain points for consumers.
So of course, gas has become a political tool that Republicans use to condemn the climate policies of the Biden administration. Pointing at the president is a convenient pretense as they defend the interests of fossil fuel corporations.
But media coverage of gas prices swings between incomplete, misleading and downright false. The truth is, gas prices have little to do with White House decisions, and there are few quick fixes.
Consumers — especially the most vulnerable — need relief. But that won’t come from more drilling, as many politicians are demanding. In fact, more drilling would keep us at the mercy of future oil shocks. And it would attach our economic and environmental health to an industry with a long history of volatility and corporate greed.
Let’s break it down.
More Drilling Is Not A Quick Fix For Gas Prices
Citing economic principles of supply and demand, political pundits call for Biden to increase the U.S. oil supply — that is, to drill more. We need more gas than we’ve got, the logic goes. Prices have risen. If supply grows to meet demand, prices will drop.
This argument misses key facts. First, Biden is not blocking the flow of American oil. In fact, he’s opened the tap more than Trump. The current administration issued more than 3,500 drilling permits in 2020 alone; that’s a third more than during Trump’s first year. And under Biden, U.S. oil production has grown from 9.7 million barrels a day to 11.6 million.
Yet oil and gas corporations are staying away from new drilling projects. Currently, 4,400 approved and drilled wells have yet to produce oil. Oil and gas executives show no sign of ramping up production.
High Gas Prices Are A Boon For Investors
Oil executives themselves have revealed the reason for their inaction — profits. The oil and gas industry is seeing record cash flow. In the first quarter of 2022, the five biggest fossil fuel companies made their highest profits in more than a decade. Last year, four major companies (Shell, BP, Chevron and Exxon) made $75 billion.
Their investors are demanding more of that windfall. So, instead of investing record profits in more drilling infrastructure, oil corporations are sending money back to investors through stock buybacks and payouts. In a March poll, 59% of oil executives admitted that investor pressure for profit, not government regulation, is the real reason they’re not drilling.
But blabber about drilling misses the mark. And it’s not like we usually use lots of Russian oil that we’re now missing. Of all the petroleum products used in the U.S. in the last decade, only 2% were Russian imports. So how do Russian sanctions affect U.S. gas prices?
The Oil Market Is A Complex Rollercoaster
Oil is a global market, which means prices are set by global supply and demand. The market could be rocked by tons of factors outside of U.S. control. Factors like natural disasters near production centers, the whims of oil-producing states and war. Such events create uncertainty about the future of supply and demand, which leads to more volatile prices. On top of that, speculators and their fleet of AI routinely bet on the future of the oil market. When prices go up, investors see dollar signs — and the more money they put down, the higher prices fly.
In 2021, the U.S. exported more oil than it imported for the first time. Our crude oil production is soaring to record highs. Yet the price we pay for oil has still fluctuated wildly over the past few years. We are still vulnerable to oil price shocks.
The additional drilling pundits have proposed are a drop in the bucket of global supply. Far more influential are international disasters that clog supply chains, worry investors and prevent new development. Domestic production won’t insulate the U.S. from the global oil market. In fact, if more of our economy ran on fossil fuels, it would make us even more vulnerable to turbulent markets.
Price Controls and Renewables Are Real Solutions to Rising Gas Prices
In the short-term, our government can help consumers with two tools. First, price controls would keep gas prices low, especially for those who need it most. Our country’s dirty oil addiction should not hurt workers and families. Second, we need an export ban on gasoline and other fuels. Despite the current crisis, U.S. exports on gasoline and diesel are nearing record-highs. With such exports, corporations send our domestic supply to the highest bidder. This ramps up market prices for everyone — including those of us who depend on gas for daily life and work.
Looking ahead, we need long-term solutions that will get us off the oil market rollercoaster. That means ramping up renewable energy. Renewables will insulate us from global oil shocks much more than domestic drilling ever could. But we have to pick up the pace of development while stopping new oil and gas. Our infrastructure and investment decisions today will have ripple effects for decades. More drilling won’t help struggling Americans tomorrow or even this year — but it will lock us into a future of dangerous emissions, climate disasters and high prices.
Help us fight misinformation on gas prices.