America's oil dependence means gas prices may not return to 'normal' until next year, FSU expert says
America's dependence on foreign oil means that gas prices might not drop below $4 a gallon until next year, said Fayetteville State University economist Abdoul Wane.
Wane said the United States depends on oil controlled by OPEC (the organization of oil exporting countries), which has the ability to increase demand and lower gas prices across the globe, but hasn't done so at a fast enough rate to slow the rising cost per gallon in the U.S.
President Joe Biden plans to meet with Saudi Arabia’s ruler, Crown Prince Mohammed bin Salman, in July, and they are expected to discuss rising gas prices. Saudi Arabia is a key member of OPEC. Russia is another member, and the war in Ukraine and deteriorating U.S.-Russia relations have made negotiations with oil-producing countries even more complicated.
Russia joined OPEC in 2016, when the consortium added 10 oil producers to form a group called OPEC+ when prices were particularly low. According to OPEC's monthly report, countries in OPEC and OPEC+ produce around 40% of the world's oil.
"We don't have a lot of control about how the oil market works," Wane said.
Gas prices have reached the peak they are now due to a heap of reasons, including the laws of supply and demand, Wane explains.
People were locked up in their homes at the beginning of the pandemic and had excess cash. Gas prices were below $2 a gallon, and people were saving their money and driving less. Now, people are ready to hit the road, but the market wasn't ready for the shock, Wane explained. Cash flushed the market, and on top of that, many more Americans decided to buy gas-guzzling cars with the cash they saved up.
"I've never seen so many SUVs on the road. That in itself will drive prices up," he said.
Wane hopes that America will see this complex issue as a sign to begin to move away from fossil fuels and begin investing in renewable energy.
"In America, we used to be number one, but now we are getting way behind," he said, emphasizing the influence that oil companies have on American energy policy.
"This is a really great time for America to really shy away for fossil fuels," Wane said. "And believe me, we have the tools and technology to do it."
If the United States wants to compete against China on the global stage, it needs to be investing in renewable energy, Wane said.
One thing that Americans can do now, if they are able, is to limit their use of fossil fuels.
"Personally, I was about to buy a gas guzzler, but I said, 'No, I'm not going to do it, I'm going to buy an electric car' ... that's my small contribution to use more renewable energy," Wane said.
