LANCASTER, Pa. — Gas prices hit new records—again—this week.
In Pennsylvania, the high was $4.77 per gallon on May 22, according to AAA.
Energy experts predict costs will eventually go down, but not anytime soon.
Gas prices are mostly set weeks or months in advance due to long-term planning around production.
During the pandemic, people drove less. Vehicle miles traveled fell 11 percent from 2019 to 2020, according to the U.S. Energy Information Administration (EIA).
Accordingly, oil companies cut production.
Two years later, cars are back on the road in nearly pre-pandemic numbers. Oil companies have still been hesitant to restart or increase production, wary that tougher environmental rules could force them closed or cut down future demand.
EIA forecasts U.S. oil production will increase 0.7 million barrels per day in 2022 to 11.9 million b/d. They predict production won’t exceed pre-pandemic rates until 2023.
During an energy industry briefing on May 26, oil producers called for reassurance from government regulators that domestic oil production can continue.
“Policy makers can send a signal that we’re invested open for investment in oil and natural gas into the future,” said Frank Macchiarola, senior vice president of Policy, Economics and Regulatory Affairs at the American Petroleum Institute.
Russia’s war on Ukraine is another major factor inflating gas prices. It cut off oil supplies both directly to the U.S. and to other countries that must now compete for the same remaining oil stores. It also spooked investors on the short-term prospects of oil. “The bottom line is that crude oil is traded on a global market where prices are offset by worldwide supply and demand, and influenced by Wall Street traders’ perception of supply and demand,” said Rob Underwood, president of Energy Marketers of America.
EIA also predicts drivers will spend 2.9 percent of their disposable income on gas in 2023, up from 1 percent during the pandemic, but still well below 5.3 percent during the Great Recession in 2008.
That’s not much comfort to drivers like Phil Gray of Perkasie, Pa. While filling up his truck on Thursday, he lamented that he may have to cut some planned summer travel.
“That gas money is coming out of somewhere,” he said. “So you don’t go out to dinner, you don’t go somewhere with the kids.” He looked forlornly at the final price on the pump display: $112.64.