by Selene Ashwood ‘22

Last year the United States saw the biggest hike in inflation rate of the last 40 years at seven percent. This economic shift has resulted in increased prices of goods significant to everyday life such as gasoline. Many teenagers seem oblivious as to the origins of this. 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.

By February, the average price of oil and gas had risen nearly 50 percent compared to the same 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. Many even initially predicted it would 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 fuel crisis, gas costs were still on the rise due to inflation, which all started with global markets´ response to the lessening threat of Covid-19, returning to full operation with strained supply yet unrestrained amounts of demand. 2021’s journey through supply chain issues 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, lasting issues for businesses, and the creation of global trade hesitance still made economic return challenging. Due to these aftermath effects, companies around the world 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.

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, once the current tax holiday is up, inflated gas prices are likely to stay for months to come. Even the Federal Reserve won’t be able to mitigate all the external factors like the war in Ukraine.

Due to said war, crude oil scarcity due to international boycotts of Russian fuel is bloating the value of gas. Following restrictions like Germany’s halt on their Russia pipeline and NATO-wide sanctions, a barrel of oil has increased 100 percent in price and will take some time to return to normal, if not rise further. In the event that Europe’s economic situation escaped its current stressors, the future of car travel still seems expensive due the persistent domestic inflation.