Largest Producers of Oil and Share of Global Production – 2020 (Oil includes crude oil, all other petroleum liquids, and biofuels) (Source: U.S. Energy Information Administrations)
Country
Share of world total
United States Saudi Arabia
20% 12% 11%
Russia Canada
6% 5%
China
A certain amount of energy driven inflation during an economic rebound following a decline is expected. The table below shows the change in gas prices that occurred over three events that caused economic downturns for the U.S. economy: 1) September 11, 2) the financial crisis, and 3) COVID. In each case, the peak of the price of gas is shown just prior to the onset of the event, the low of the gas price during the event, and the gas price approximately one year after the low occurred. Although there are various factors that affect gas prices, a significant factor is the demand for gas. In each case as the economy declined, the demand for energy (including gas) dropped and gas prices dropped significantly as energy supply exceeded demand. In each case as the economy rebounded, the demand for energy (including gas) increased and gas prices increased significantly as energy demand exceeded supply.
Change in Gas Prices: September 11, The Financial Crisis, COVID (Source: U.S. Energy Information Administration)
Event/Date
U.S. Regular Gas Price
Change in Gas Price
Sept. 11
Sept. 3, 2001 Dec. 17, 2001 Dec. 23, 2002
$1.54 $1.04 $1.37 $4.05 $1.59 $2.56 $2.49 $1.68 $2.79
-32.5% +21.2%
Financial Crisis
July 14, 2008 Dec. 29, 2008 Dec. 28, 2009
-60.7% +61.0%
COVID
Jan. 6 2020 May 4, 2020 May 3. 2021
-32.5% +66.0%
The rising gas prices in 2021 were not a result of government stipulated cutbacks in U.S. oil production. The strong rebound in global economic growth contributed to a significant rise in energy prices, and the U.S. is part of the global energy world. After declining 3.3% in 2020 global GDP growth strongly rebounded to 5.5% growth in 2021. And in 2022, Putin’s unwarranted invasion of Ukraine created uncertainty and supply questions in global energy markets, again contributing to increasing oil prices. Although differences exist between oil markets, the overall ups and downs of U.S. and European oil prices are strongly related, indicating a truly global energy market. Energy costs have been driving inflation, not only in the U.S. but also in Europe and globally. An annualized inflation rate of over 44% in energy contributed to the 7.5% annualized inflation rate in March for the European Union. In the U.S., for the 12 months ended March 2022 overall energy prices were up over 32% with gas prices up 48%.
Central Wisconsin Report - Spring 2022
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