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Analyst on the reason why gas prices are so high

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Posted at 2:36 PM, May 21, 2022
and last updated 2022-05-21 16:36:35-04

There is a lot of finger-pointing about who's to blame for the high gasoline prices.

Republicans blame the Biden administration while Democrats say the oil companies are price-gouging. Analyst Severin Borenstein of Berkeley's Energy Institute told CBS News the root of the problem is more complex.

"Most of the increase has come from crude oil prices going up, and that's because world demand has been coming back quite strongly from the pandemic and supply hasn't caught up," he said. "Even before Russia attacked Ukraine, we were seeing the production of oil lagging. Producers in the United States are reporting they're having a hard time getting workers to come back to the oil fields. They're having supply chain problems with parts and equipment."

Oil companies are benefiting from the spike in prices at the pump. In the first 3 months of the year, Chevron's profits rose 33% over the last three months of 2021. Shell's profits jumped 42% while Conoco Philips is up 43%, and British Petroleum's profits soared 51%.

"Oil companies are making a lot of money by going along for the ride. They're selling their oil at the market price," said Borenstein.

The current national average for a gallon of gasoline is $4.59 a record high price, according to AAA. 

The high cost of gas has people rethinking summer travel plans and cutting back on using their vehicles. Borenstein said it may be a while before gas prices drop as experts predict gas prices could hit $6.20 per gallon nationally by August.

"I think that the reality is we are in for higher gas prices, certainly through the summer and probably through the end of this year, possibly gradually going lower. But we're not going to see $2 or $3 gasoline even in the near future," said Borenstein.