Oil stalemate: OPEC’s refusal to crank out gas means higher prices — and more profits for oil giants

Grumpy at the pump… Oil prices spiked to a seven-year high this week, while US prices are up 63% this year — a dollar more per gallon than last year. The spike is weighing on drivers’ wallets and boosting inflation concerns because higher prices mean pricier goods. President Biden asked OPEC to crank up production to keep economic recovery on track. But earlier this week, OPEC’s powerhouses rejected the request and said they’d make only gradual production increases to help prop up prices.

A slippery slope… Demand for oil fell during the pandemic, when people stayed home and drove to the mall less. But demand rebounded faster than analysts expected. So to keep prices high and profits flowing, oil giants are capping supply. It’s paying off for oil companies, but costing everyone else:

• Barrel half full: BP and Shell doubled their profits last quarter from the previous year, and Exxon boosted profits 6X.
• Barrel half empty: Gas prices have hit $4.41/gallon in California, while panicked petro-purchases have caused fuel shortages in Britain and China. Such high gas prices could also increase the cost of food, heating, plastic, and other goods.