03 Things To Know About The Surging Price Of Gas

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The average price of fuel has jumped considerably since the turn of the year. And this increase is constantly grown, causing the average price of the worldwide gas to increase to 1.34 (US Dollar) per liter. And of course, not all countries are on the same level when it comes to getting their fill, especially with HONG-KONG beating all records with 2.876$. So why the spike in prices and at this particular time?  These are the answers to these questions that we will provide.

I- Reasons for the rise in fuel prices

1-The post crisis period of COVID

This sudden increase is due to a return to a certain level of stability after the COVID pandemic crisis. The demand that was once far below normal has returned to normal and even increased. Simply because the cases of COVID have largely decreased. As a result, activities have resumed their normal course, and people have started to go out again, either to travel, to work, to school, etc. And also the supply of goods by any vehicles has also resumed. So, the increase in the demand for gasoline is a reason but a secondary one that has contributed to the rise in prices.

2-Russian-Ukrainian conflict

The main cause and certainly not the least comes from the Ukrainian invasion by Russia. How? As a matter of fact, Russia is the 2nd oil exporting country in the world and its oil has been excluded from any export as a sanction in the countries (composed of the USA and the EUROPEAN UNION) which consider its invasion as outrageous. These countries were highly addicted to this Russian energy. Besides that, several global energy companies including Shell, BP and ExxonMobil had voluntarily agreed to stop their operations with Russia. And this was already limiting the supply of oil. These sanctions only reinforced the problem that was already in place.

“In France, we do not produce enough gas and too much gasoline. The consequence is that we have to import diesel. It comes a little from the United States but a lot from Russia. We import about a quarter of our diesel needs from Russia,” explains Jacques Percebois, director of the Center for Research in Energy Economics and Law (CREDEN) and professor emeritus at the University of Montpellier.

Reuters, a London-based news agency, reports that the United States imported more than 20 million barrels of crude oil and other gas products per month in 2021, on average; this is about 8% of total imports.  As long as this crisis persists, fuel prices are likely to remain high, said Devin Gladden, spokesman for the AAA auto club and an adviser to the Department of Energy under the Obama administration.

II- What can we expect in terms of price trends?

This is obviously a reasonable query, but “This is a dire situation and it’s not going to get better any time soon” said Patrick De Haan, head of oil analysis at GasBuddy, in a company press release. “High prices are likely to last not days or weeks, as they did in 2008, but months. GasBuddy now expects the annual national average to reach its highest level on record.” 

My bet is that it will be a longer period of higher prices” he said.

In the face of that, what actions on everyone’s part can at least spur this ongoing surge? We are going to explore on two different aspects: first, what the specialized organizations have planned to do and what we, as consumers, could do to reduce the impact of this increase and possibly bring it down.

III- Measures that can be taken to stop this increase

1- The part of the organizations

Given that “Oil prices play a major role in the rise of gas prices”, said representatives of the AAA (American Automobile Association). The Organization of Petroleum Exporting Countries plus (OPEC+) said they would increase production by 400,000 barrels each day in April. The International Energy Agency (IEA) countries want to follow the lead and unleash 60 million barrels of crude from their reserves to relieve high prices. However, this still does not fill the gaping hole caused by the withdrawal of Russian oil from the market.

2. Our contribution together

Small, trivial and not at all obvious gestures can be extremely valuable. For example, you could car pool and use public transportation. This will limit the use of your car and consequently reduce the expenses related to gas. This not so easy to concede but it would reduce the huge gap between supply and demand, which, according to De Haan, could lead to lower prices. With the goal remaining the same, you can also consider making changes to the way you drive, such as accelerating and decelerating more smoothly, driving slowly and turning off the engine instead of idling can also help you save quite a bit. Given the forecasts that have been shown, we’re not really sure that prices will drop this year even if the Russian invasion is contained. But we hope that organizations, institutions and governments will find a solution to this inflation that is affecting the lives of people in so many ways. What do you think about fuel prices? Please give us your opinion in comments.

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