The Long-Term Outlook for Gas Prices Staying Above $3 per Gallon

For many of us living in the United States, paying more than $3 per gallon of gasoline is a reality that has been a part of our everyday lives for quite some time. This is in contrast to countries like Sweden where the price is significantly higher. However, this raises the question: How long will gas prices stay above $3 a gallon?

Historical Context and Current Trends

Gas prices in the 1980s and 1990s were much lower, especially in relation to the purchasing power of the US dollar. The cost of a third of a gallon of gasoline (1.26 liters) was even less than the current price of a gallon. This historic context is crucial in understanding the current situation. As long as the value of the US dollar remains below the value of a third of a gallon of gas, the likelihood of gas prices consistently staying above $3 per gallon remains high for the foreseeable future. This could extend well into the 2100s.

Personal Experiences and Regional Differences

For many Americans, the last time they saw gas prices below $3 per gallon was in the 1990s or possibly even the 1980s. This significant increase in fuel costs has impacted a wide range of industries and households, from transportation to manufacturing. The economic and social implications of these higher fuel prices are profound, affecting everything from daily commutes to international trade.

Government's Role and Taxation Policy

The comments questioning why governments do not tax gasoline more heavily to fund better cars and a transition to electric vehicles bring up valid points. However, the reality is more complex. For instance, in Sweden, the price of gasoline is remarkably high. The current price there is significantly over $11 per gallon of US fuel. This stark difference highlights the diverse pricing strategies and taxation policies of different countries.

Biden Administration's Impact on US Energy Policies

The policies implemented by the Biden administration have transformed the United States from a net energy exporter to a net energy importer. One significant decision was the cancellation of the Keystone XL pipeline, which has restricted the US from sourcing more than 500,000 barrels of oil per day from the Canadian Alberta region. This lack of reasonably priced oil has contributed to higher gas prices. The administration has also paused all oil and gas leases and held up permits to fight with courts over climate change costs. This regulatory approach has caused delays in leasing and development, impacting the oil and gas industry's ability to provide affordable fuel.

Executive Decisions and International Relations

The current administration's actions on executive orders and international relations, such as the sanctions on Iran and reentering the Iran nuclear negotiations, have angered Saudi and UAE officials. They no longer take calls from the President due to the impact of his policies on oil prices and supply. The ban on leasing new fossil fuels in federal land and waters has faced significant challenges, and no new land rental auctions have occurred since June 2021.

Impact on Business and Investment

The uncertainty caused by new regulations and policies has dampened business investments and developments, especially in federal lands. Compliance with the numerous new regulations has made federal land leasing less attractive, and many businesses are opting for non-federal lands instead. This shift in investment patterns further exacerbates the supply issue, leading to higher prices for consumers.

Alternatives and Future Outlook

There are suggestions that the Biden administration could reverse some of these trends by adopting a more pro-business approach, similar to the "Drill baby drill" ethos. This could potentially increase the supply of oil and lower gas prices. However, the current ideological stance of the administration, with its focus on green energy, may hinder such a shift. Until green energy solutions become readily available and reasonably priced, the reliance on fossil fuels will continue, leading to higher gas prices.

Conclusion

The outlook for gas prices staying above $3 per gallon in the United States is complex. It is influenced by both national and international policies, economic conditions, and regulatory frameworks. While the Biden administration's policies have had a significant impact, the long-term trends in fuel prices are likely to be determined by a combination of these factors. Understanding these dynamics is crucial for policymakers, businesses, and consumers alike.