Saturday, September 10, 2022

Gas prices fell back to earth in August, as Americans adjusted to oil company greed

As the Summer driving season finished up, the availability of gasoline remained above pre-COVID levels, and gas prices continued to drop from inflated highs.

In looking at the data from the Energy Information Administration, and it shows that gasoline in America was generally more plentiful than in most of the 6 years leading up to the COVID era, and was mostly higher than the amounts we had last year.

A big reason for that is because Americans continued to adjust to higher gas prices by reducing their usage. There were weeks in August 2022 that Americans used less gasoline than they did in 2020, when many Americans were still limiting travel due to the pandemic and were working more at home. And it is significantly less than the high usage of the mid-late 2010s.

This reality has finally started to affect the oil markets, as futures prices fell to their lowest levels in 7 months, and US gas prices are down more than 25% from their peak in mid-June. And a report from the Commerce Department earlier this week backed up my theory that the price spike in June had less to do with supply-and-demand, and more to do with corporate GREED. Take a look at how corporate profits in the US petroleum/coal sector has taken off in the last year, well above pre-COVID levels, with Q2 2022 seeing a major jump.

We'd better see those numbers go back down in the next quarterly report, which unfortunately won't come out until after November's elections. Even so, it's clear that the GOP's strategy of "blame high gas prices/inflation on Dems" is sounding increasingly clueless as prices have come back to reality. Especially since GOPs offer no solutions to inflation beyond "screw working/poor people."

I just wish Jerome Powell and the rest of the central bankers recognized that a main driver of inflation is ebbing, and would back off on being so hell-bent on shutting down our strong economic and job growth to tame prices. Americans have adjusted to the situation quite well, and the Fed doesn't need to impose economic pain when we've already backed off on our own, and paved the way for a healthier, more balanced economy.

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