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HERE'S WHAT'S ACTUALLY DRIVING THE SURGE IN FUEL PRICES
Nov. 19, 2021
By John Phipps, AgWeb.com
Every time we fill up a vehicle or our on-farm tanks, we notice the price a little more. And for good reason. Since May 2020 - worst of the Covid shutdown, national retail prices have nearly doubled. Of course, last May, many of us weren't going anywhere, whether for pleasure or work. But it turns out higher gas prices are the result of a number of perfect storms, literally.
To begin with, the demand collapse stopped drilling in its tracks. Few oil producers can survive $16 oil for long. Tight oil from fracking saw the same drilling halt, but curiously output from fracking did not fall as far as expected. The industry overlooked the large number of wells already drilled but not fracked or producing. So domestic supplies were reduced but not as sharply as other energy supplies. Although tight oil has reduced us to very low net imports, OPEC+ is still trying to keep prices as high as as possible, affecting world demand, and world prices impact US oil prices.
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