by Selene Ashewood ‘22

Last year the United States saw the biggest hike in inflation rate of the last 40 years at 7.5 percent. This economic shift has resulted in increased prices of goods significant to everyday life such as gasoline–with many drivers paying $50-$60 just to fill a modest tank. Many teenagers seem oblivious as to why this is–paying the new fees and moving on with little regard for the state of the economy. But it is important to understand how it got to this point, why it will unfortunately stay at this point for the foreseeable future, and how the nation adjusts.

The average price of oil and gas in general rose nearly 50 percent compared to this time last year, according to an article by MarketWatch. Experts are almost sure this cost will not fall back down even if inflation is to return to a normal rate. Some even predict it will go higher. There are multiple reasons for why this all came about, many of which will continue at least into the near future. 

Even without the great changes in crude oil costs, gas costs were still on the rise due to inflation–which all started with global markets in response to the lessening threat of Covid-19, and returning to full operation with strained supply yet unrestrained amounts of demand. 2021’s journey through supply chain issues not only caused short-term stress for holiday shoppers, but also acted as the catalyst for a wave of inflation that has stretched into 2022 in the United States. Although industries were significantly less damaged by the pandemic than they were in 2020, the aftershocks and lasting issues on businesses and the creation of global trade hesitance still made economic return challenging. Due to these Covid-19 aftermath effects, businesses around the globe suffered the inefficiency of not having enough resources to fully satisfy demand, but satisfying it enough to overwhelm shipping ports. 

Aside from an increase in shipping times, international and domestic businesses also increased the costs of their goods. Through a price-hiking cycle, costs for producers became the costs for consumers and thus a multitude of goods were either unavailable or newly expensive. Following that, the winter months drove up demand for heating oil. This normal occurrence was exacerbated in recent years due to an already fragile system of global trade, which is also to blame for the supply chain dilemma. 

Now that Russia’s invasion of Ukraine has begun, expected gas scarcity, if Russia is to withhold crude oil from the international market, is also bloating the value of gas. Following restrictions like Germany’s halt on their Russia pipeline and NATO-wide sanctions, oil prices have already risen 5 percent and will take some time to return to normal, if not rise further. 

 As the U.S. economy proved its resilience by rapidly growing 1.7 percent in the final stretch of 2021, in turn the prices of everyday items increased. Incomes rose, so cost expenditures had to as well in order to not give the average person a ridiculous amount of purchasing power. Teenagers missed this economic change since they don’t yet have careers with actual salaries to increase, so they are left confused and low on funds at the gas pump. 

Supposedly, the Federal Reserve (the U.S’s central bank) will soon raise interest rates to combat this which would even out all the spending and bring prices back down. However,  gas prices are likely here to stay because for months to come. Even the Federal Reserve won’t be able to mitigate all the external factors that are projected to make a gallon $4 by the summer.