Why are gas prices so high?

Gas prices have reached astronomical heights. Though the average dipped slightly to $4.24 per gallon for regular unleaded gas from its record high of $4.33, it is still around 70% higher than it was a year ago.

Rising gas prices are generally tied to geopolitical events (i.e. Russia’s invasion of Ukraine). The U.S.
banned imports of Russian oil, as well as liquefied natural gas and coal, on March 8. Though most of Russia’s oil goes to Europe and Asia, oil is priced through a global market. The total supply of oil has diminished amid sanctions against Russia, but demand has stayed the same, leading to gas costing upwards of $7 at some stations in Los Angeles.

How much longer will this last?

Gas prices aren’t going down any time soon. Energy Intelligence research director Abhi Rajendran predicts they may decrease by the third quarter of this year if “there is some pathway to resolution in the Russia/Ukraine situation, plus an Iran nuclear deal.”

“The other factor that could push prices down is [if] the world tipped into a recession that ultimately pulls oil prices down,” Rajendran said.

But in order to really decrease prices, there needs to be more supply to meet the demand, which Rajendran said is “unlikely to happen materially in 2022, and more possible in 2023.” That would also not be great, given that the only way to mitigate climate change is to reduce dependence on oil and gas, not increase supply. (And
recent research shows we need to reduce production ASAP.)

In the next few weeks, gas prices will likely remain the same or slightly higher, and could reach a national average of $4.50 per gallon in the coming months, Rajendran said.

Why are electrical vehicle prices also going up?

Gas isn’t the only thing that’s gotten pricey. The EV industry is having a hard time with inflation and the cost of materials.

For Tesla, inflation is the main issue. Tesla has
upped its prices — twice. The company most recently bumped up prices across its entire range of EVs between 5% and 10%, which brought up the price of its cheapest car from $44,990 to $46,990. “Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics,” Elon Musk tweeted recently.

Rivian has needed to increase prices too, which hasn’t sat well with customers. The company raised prices by more than a whopping $12,000 — then quickly
reversed course, at least for reservation holders, after a wave of customer backlash. Rivian executives said they needed to increase prices because of inflation and the cost of materials.

One of those materials is nickel, which is key for producing EV batteries and has been on a rollercoaster ride this month. Sanctions on Russia, which is a massive supplier of nickel, are to blame for the immediate spike in prices, but the issue has also been a
long time coming. The move toward renewables and clean energy tech is also causing a supply crunch.

How are high gas prices affecting delivery services?

Uber, Lyft and other ride-hailing and delivery services are trying to make it easier for drivers to pay for gas by adding fees to rides and offering cash back to drivers. The response from drivers has been decidedly mixed.

Uber and Lyft
added surcharges for car rides that will go straight to the drivers’ wallets, and Uber specifically is encouraging drivers to switch to EVs (as if it were that easy). Instacart followed shortly after, tacking on an additional 40 cents to each order. Separately, Lyft and DoorDash are providing drivers with cards that offer cash back on gas.

Some workers don’t think the surcharges are enough. A
petition on coworker.org is urging the delivery companies to charge customers even more for rides and for companies to pocket less money from fares. “Gas prices are driving us out of the rideshare industry. We need a rate increase!” the petition states.

Meanwhile, Amazon Flex drivers want the company to do something, anything to offset gas prices. The drivers — who are independent contractors who work for Amazon through an app —
rallied last week to ask Amazon to follow Uber, Lyft and others in helping them pay for gas.

What are governments doing to address high gas prices?

In California, where gas prices have topped $7 per gallon in some places, Gov. Gavin Newsom has
proposed a relief package that includes $9 billion in direct payments to car owners — including those who drive EVs — as well as $750 million for free or reduced public transit grants. As part of the gas price relief program, car owners would receive a $400 rebate per registered vehicle (up to two cars per person) as soon as July.

Nationally,
House Democrats have suggested financial relief for struggling Americans, but the proposals have reportedly gone nowhere in Congress and it’s unlikely a program similar to California’s would pass.

Meanwhile, President Biden is
reportedly considering a variety of ways to reduce gas prices at the pump, including a gas tax holiday and rebates for consumers.

“The president and our national security team and our economic team are working overtime right now to evaluate and examine a range of domestic options,” White House Press Secretary Jen Psaki said this week.

What are the climate tech solutions to high gas prices?

The best way to beat high gas prices is to use less — or none — in the first place. These solutions are going to sound awfully familiar if you’ve been thinking about how to address the climate crisis (and really,
who isn’t these days?). The good news is the world has a lot of the technology we need to stop wasting money on gas. The bad news is not all of them are an easy flip of the switch. And some are becoming more expensive due to supply chain issues.

For most of us, filling up at the pump is the most obvious pain point. So it follows that electric vehicles are among the most effective means to deal with high gas prices, with hybrids being a close second. The catch is that EVs have become a hot ticket, and the aforementioned price spikes. Not ideal! If only there were some proposal,
some policy that included tax credits to make EVs more affordable that Congress could pass …