Since the invasion of Ukraine in February, gas prices have skyrocketed. Some have blamed President Biden for his shutdown of the Keystone pipeline and others have put the blame on being cut off from Russia’s oil, but the reality is not that simple.

For decades American politicians and oil CEOs have raved about energy independence through a boom in the American oil industry. In recent years, America has been the top producer of oil in the entire world.

You would think that this in turn would make our gas prices cheap, right? Wrong. You see with any commodity, if there is a disturbance in supply and demand somewhere else in the world it can cause a spike in other parts as well. America being energy independent doesn’t mean that we are completely independent to the rest of the world. It’s not like American oil companies are hoarding all the oil just for America; they want to expand to other parts of the world. Additionally, the US must buy oil from other parts of the world. For example, the US imports 50% of its oil from Canada.

But if America is the largest oil producer in the world, why do we continue to import oil from other countries? The US produces what petroleum engineers would call a lighter, sweeter crude that contains less sulfur. The problem is that many US refineries were built long ago and made for heavier, sour crudes that are produced in other parts of the world like Russia. The US can’t simply produce more oil to stop the spike in prices but rather drill new holes to get the heavier crudes. That’s when Wall Street and the oil companies come into play.

Oil companies have been reluctant to drill with the boom and bust cycles during Covid. Whereby, unexpected large profits are followed by a decline in profits and loss of employees. During the bust part of the cycle, many oil companies went under leading investors to demand more restraints from the companies. Instead of investing in drilling to combat high prices, Wall Street pressures companies to return cash to shareholders with dividends and buybacks.

The economic toll of the rise in gas prices is devastating. Wayne Hills junior and delivery driver for Anthony Francos, David Groel spends “more than a quarter of [his] monthly salary on gas”. With all Americans being affected by the prices, President Biden has attempted to soften the blow by tapping into the US’s oil reserve, sympathizing that he “grew up  in a family like many of you where the price of a gallon gasoline went up, it was a discussion at the kitchen table.”