The Truth About Gas Prices

For as long as I can remember I have had insatiable curiosity. When I don’t understand something I seek as many sources of information as I can find in my quest for understanding. Thankfully, and not coincidentally, my family has always been a great starting point. During the COVID-19 pandemic it was extremely helpful to talk with my mom, who is a retired nurse, my uncle, who is a public health expert, and my cousin the pediatric specialist. When navigating the economy it’s always been helpful to call on my dad, a retired financial planner, or my best friend, who works with one of the world’s largest banks. When it comes to understanding America’s energy crisis, my cousin who works for the largest American oil company has an enlightening perspective.

I’ve heard the various flavors of news suggesting simple solutions to America’s rising gas prices, and those solutions usually start with “President Biden should just….” and they suggest a 15-second solution. This is not because the solutions are actually that simple; if they were we wouldn’t have increasing gas prices to begin with. The truth is, the issue of gas prices is quite complicated and the cable news talking heads assume we aren’t smart enough to follow them. More cynically, perhaps it’s the talking heads who aren’t capable of understanding the issues well enough to explain them. Whatever the reason, let’s take a stab at making this easy to understand.

First of all, oil production in the United States has never been higher than it has been over the last two years. One popular talking point has been that President Biden stopped US oil production, but that is patently false. Another popular talking point is that the President could lower US gas prices by simply cutting off oil exports, and that the US can produce enough oil to do that while also cutting off imports from war-mongering Russia. This is also patently false. Let’s take a look at why.

While gasoline is the top of the list for America’s oil consumption, only 45% of our overall oil consumption has to do with gasoline. We use it to make plastics, which surround us like water surrounds fish. The liquid you wash your dishes in has a petroleum base, the coffee you drank on your way to work was made possible by petroleum-based fertilizers, as was the grain in the food you gave your pet this morning. Neither the bread and cereal we eat nor the beer and whiskey we drink is produced without oil. Chewing gum, workout equipment, toothpaste, guitar strings, deodorants, contact lenses…all made with oil. It is theoretically possible to shut off Russian oil imports, and it might not have a drastically inflationary effect on gas prices, but it would absolutely mean a huge increase in prices of basically everything else we use on a daily basis.

That’s not exactly a win.

The real solution, unfortunately, is not simple at all. We have to cut our fossil fuel addiction, not only because of gas prices, but also because fossil fuels are second only to methane in terms of the top contributors to climate change. The reality, though, is that we have not yet developed a technology that will enable us to do this. Electric cars are helpful, but we still mostly use fossil fuels to charge the batteries. Solar, wind and hydroelectric are all good options, but even the three combined can’t come close to producing the energy we need to power our modern way of life. To get off of fossil fuels we have to completely re-think the way we eat, the way we dress, the way we travel, and the way we live. How many people do you know who are willing to do that?

It’s easy to speak anecdotally about simple solutions to lowering gas prices, and you can get a lot of clicks by promoting polarizing solutions which tend to point fingers and blame “them” for the problem. At the end of the day, however, there are no simple solutions, and anyone who tells you there are is misleading you…either out of ignorance or on purpose.


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