For Americans, going to the gas station these days is painful.
I am never going to financially recover from this.
But why is gas so expensive?
Sure, geopolitical crises don't help. But Russia isn't the world's biggest oil producer.
It's not Iran, or Iraq, or even Saudi Arabia.
It's actually the United States.
So why are Americans paying so much for gas?
The gasoline you put in your car comes from crude oil that's pumped out of the ground.
And the reason Americans are paying record prices for gas is because the U.S.
doesn't treat its fossil fuel resources the way many other big-time oil countries do.
Oil is not treated as a public resource.
Instead, it's privatized for corporate profit.
Since 2015, the U.S. government has allowed oil extracted in the United States
to be sold abroad on the global market.
The result is that U.S.-made oil is priced based on global conditions, not domestic U.S. demand.
When there's geopolitical instability in another part of the world —
like another top oil producer invading its neighbor —
a lot of uncertainty gets introduced into the global oil market.
Will tankers be able to deliver their cargo?
Will pipelines be protected?
Will production levels be maintained?
What if an oil producer is unable to deliver their product?
That would reduce supply, which drives up the price.
And because the United States leaves it up to private oil companies to extract, refine and sell oil,
it doesn't control prices,
and it doesn't control whether or not supply is increased to meet demand.
Oil companies do.
On the other hand, other major oil producers — like Saudi Arabia and the United Arab Emirates —
treat oil production as a matter of national security, and regulate it that way.
These countries maintain spare oil-pumping capacity
that can be turned on and off in a matter of months,
so their citizens are better protected from the shock of global market spikes.
That's why their consumers can expect reasonably controlled prices with no sudden swings.
In fact, even as Russia invades Ukraine and faces massive international sanctions,
gas prices there remain a fraction of what they are in the U.S.
But even before events in Ukraine drove global prices higher,
they'd been rising in the United States for months,
because oil companies were refusing to produce more.
Because of the COVID pandemic, the global demand for oil dropped significantly in early 2020.
As a planet, we were briefly using a lot less energy.
But this was a financial disaster for a lot of U.S.-based oil companies
that had recently invested in new extraction.
Many had to shut down completely, or at least reduce their output.
But when demand went back to normal, many oil producers decided
they didn't want to take the risk of investing in more production again.
"But the fundamental question about why we're not growing is because
we have pivoted as an industry, at least for the public eyes,
from a business model that is chasing growth at all costs, to now we're chasing returns."
Translation: we're not going to invest in creating more supply.
Instead, we want to keep prices high. And it worked.
In 2021, the 25 biggest oil and gas companies made $205 billion in profit.
The Biden administration tried asking other oil producing countries to pump more,
but they also refused for both financial and political reasons.
So instead of benefiting from the U.S. being the world's biggest oil producer,
the U.S. government is left begging oil companies and other countries
to release more oil into the market
to give some relief to us out here buying gas to get to work.
Not exactly a dignified position for a global superpower.
But the private ownership of a natural resource like oil
does more than just expose American consumers to higher prices
caused by wars or global pandemics.
It also exposes them to profiteering.
Even when market forces stabilized,
we've seen that U.S. oil companies had little incentive to lower prices.
With average gas prices over $4 a gallon
and the federal minimum wage at $7.25 an hour,
it can cost a low-income worker their entire day's pay to fill up the car they need to drive to work.
It's clear something needs to change.
Now, there are no serious calls to nationalize oil in the United States.
After all, even water is sometimes privatized here.
But there are politicians now calling for oil companies to face a windfall profits tax.
Essentially, that means a tax on excess profits
in the hope that it would discourage oil companies from gouging consumers.
But even if it passes, that's only a partial solution
because it still leaves U.S. consumers vulnerable to global price surges.
Right now, oil companies have powerful lobbies that will not only fight attacks like that,
but also don't want to see the U.S. unchain itself from fossil fuels.
The oil industry has spent hundreds of millions of dollars lobbying the federal government.
More public control of oil would mean less corporate pressure on Congress
to maintain the current fossil fuel economy.
Because while we need more affordable gas prices now,
our future depends on transitioning to different forms of energy altogether.