All over America, we have seen the insane prices of gas going up. Although many people want to blame the government for the increased prices, the problem is a lot bigger than the government. Even the gas prices in Canada are hitting record-high numbers. From COVID aftershocks to the Ukraine conflict, there’s a near-endless number of reasons why the economy and, more specifically, oil are suffering.
One major reason is that companies are not in a rush to mine oil because they know that less product means higher prices. Companies started to limit how much they invest in new production so they can reward their investors and buy shareholder buybacks. This way, they are making way more money than they were before the pandemic. In fact, during the first three months of 2022, the top oil companies Shell, ExxonMobil, BP, Chevron, and ConocoPhillips, brought in more than 300% more than in the first quarter of 2021. In that same period, almost 28% of Americans spent $35 billion on gas, which is equivalent to how much profits these companies made. Currently, oil prices have tumbled, with the U.S. benchmark falling below $100 as recession fears grow. Specifically, there appears to be fear that an economic slowdown will cut demand for petroleum products.
What do you think about the drop in oil prices and is it making you worried?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.