(HorizonPost.com) – As Americans return to work and social life rebounds at this stage of the coronavirus pandemic, the demand for gasoline continues to rise. However, without an increase in supply to match the pace, the cost of oil is increasing, and US citizens are seeing that change reflecting at the gas pumps. Unfortunately, Bank of America predicts the worst is yet to come as it warns of oil prices hitting “$120 a barrel by June 2022.” That level would be about 45% higher current costs and will likely make gas even more expensive for consumers across the country.
Not only do US citizens have concerns about inflation and supply chain issues affecting the cost of nearly everything they buy, now families have to worry about how they’ll afford to drive to their jobs to earn their incomes.
Surging Oil Prices and the Economy
The rise in the cost of crude oil appears to be a case of supply and demand economics. The Organization of the Petroleum Exporting Countries (OPEC) refuses to increase production beyond 400,000 barrels per day, as the members agreed upon during the summer. National Security Advisor Jake Sullivan says the number is “simply not enough.” Although President Joe Biden asked the group to increase production to control gas prices, they refused.
Senator Joe Manchin (D-WV) presented a different idea when speaking to Fox News this week. The legislator is asking why the United States doesn’t do more drilling at home. Natural gas costs are also increasing and will impact much of the US as winter temps start to drop. Specifically pointing to his state, the senator said that West Virginia “has an ocean of natural gas under it” and just needs a pipeline to tap into it. He feels the US should stop relying on foreign sources for critical energy when we could be energy independent. That way, America could control its own supplies thereby keeping prices low.
Energy Secretary Jennifer Granholm floated the idea of tapping into US reserves to alleviate the pressure at the pump. Still, the head of global commodity strategy at RBC Capital Markets, Helima Croft, doesn’t think releasing the stockpile would greatly impact oil prices, and Goldman Sachs agreed.
Goldman Sachs said using oil reserves would only reduce the predicted price by a mere $3 per barrel. Such a small drop likely wouldn’t help lower gas prices for US citizens.
If something doesn’t change soon, American families could continue to suffer when filling their vehicles for the foreseeable future without relief, in addition to dealing with accelerating inflation on many other necessary consumer goods and services.
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