People living in Hawaii are now paying over $5 a gallon for gas at the pump. My wife couldn’t believe that it now costs us nearly $60 to fill up our little family car.

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A year ago, the average price was $3.91. Across the U.S. consumers are paying extraordinarily high gas prices, straining family budgets and leading to frustration with our current government. While the cost of crude oil for oil companies has gone down, the prices of gas at the pump remain at all-time highs.

Meanwhile, oil companies are achieving record high profits. At a recent congressional hearing, in the wake of sanctions imposed by the U.S. and allies against the import of Russian oil, six oil companies admitted that they made over $75 billion in profits in the past year, the oil industry cushioned by over $30 billion in government subsidies.

Despite the burdens endured by U.S. taxpayers, these companies have no plans to stop payments of dividends to their shareholders. They will continue to engage in stock buybacks that enrich shareholders and company executives.

North Sea oil rig
Gas prices are at record highs in many places including Hawaii, and it has become a political issue in 2022. Creative Commons/Gary Bembridge

Oil is a global common commodity, whose prices are determined by the global marketplace where the laws of supply and demand and speculation by traders in the futures market drive prices up and down. Alarmingly, what U.S. consumers pay for gas at the pump has not aligned with what oil companies have been paying for crude oil.

“House Democrats on Wednesday accused oil companies of ‘ripping off the American people’ and putting profits before production as Americans suffer from ever-increasing gasoline prices during the war in Ukraine,” The Associated Press reported April 6.

Recent events seem to support House Democrat assertions. There is an obvious disconnect between what consumers are paying for gas at the pump and what the oil companies are paying for crude oil.

Following Russia’s brutal invasion of Ukraine on Feb. 24, the price of crude oil began to rise. By March 7, the price had peaked at $130 a barrel.

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The cost of oil dropped significantly after that peak, but the gas pump prices did not. Today, gas prices remain at near record highs despite crude oil prices having fallen as low as $102 a barrel.

Oil companies admit that it is because of pressure from shareholders that they are withholding oil production today. President Biden has taken substantial steps to increase oil production by releasing up to 1 million barrels of oil per day from the Strategic Petroleum Reserve.

Business is business, but with oil companies being subsidized by the government with over $30 billion in tax breaks, it should be expected that oil companies provide taxpayers with fair prices at the gas pumps. If the oil companies fail to do so, it is up to Congress to provide the necessary relief.

Furthermore, the oil company stranglehold on Hawaii’s energy requirements reinforces the urgent and existential need to transition to a clean and sustainable energy future. Again, it goes back to the laws of supply and demand.

At the height of the pandemic, as many stayed home and fewer people drove, the demand for gas decreased and the prices at the pump were low. It’s time we invest in long term solutions to help us transition to a more sustainable future. This is for the sake of our economy, our environment, and our national security.

It should be noted that the Jones Act has been blamed for rising gas prices, yet the American Maritime Partnership has determined that the only beneficiaries of a Jones Act waiver would be the oil traders, and that the cost of transportation would be “less than one cent per gallon on average with no guarantee that any benefit would be passed on to customers.”

Gas prices are soaring all across the country, not just in Hawaii. In reality, the Jones Act provides a net gain in benefits for Hawaii.

Local maritime industry leaders and unions point out that it protects local jobs, fair wages, safe working conditions, and our environment (imagine unregulated foreign flag supertankers making frequent oil deliveries to our islands). National authorities point out that it protects our country’s ports and shipbuilding industries.

In reality, the Jones Act provides a net gain in benefits for Hawaii.

Retired Admiral Paul Zukunft, the 25th Commandant of the U.S. Coast Guard, warns: “The events in Ukraine have reset the world order girded by the United States for more than seven decades with great power tensions among our nation, Russia, and China heading into uncharted waters.  This is not  the time to cede our maritime interests to a foreign nation and potential adversary that would then have leverage over all aspects of our maritime commerce to include our military strategic sealift,” the Honolulu Star-Advertiser reported March 11.

While the prices at the pump continue to rise and oil companies continue to make record profits, the true impact will be felt by those who have less room in their monthly budgets: the families who are living paycheck to paycheck, the college students working their way through school, and those on limited income needing to go to their appointments or pick up medication.

The real conversation should be around why oil companies, traders, and other corporate interests continue to rake in the profits at the expense of those of us at the pumps. While the world watches in horror the humanitarian crisis happening in Ukraine, oil companies should not be looking at it as an excuse to increase their profits and fatten their wallets.

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