Money doesn't disappear after the initial recipients spend it, it keeps circulating. We currently have at least 3 trillion dollars chasing no added goods and services. Unless governments institute rationing, price determines how scarce goods are distributed.OutToLunch said:The injection of the additional purchasing power was a short term issue and mostly spent on durables. That influx is over and does not explain the recent increase in fuel prices. As COVID restrictions have lifted, consumers have shifted their spending to more service sector related products/experiences.
The production costs of that oil you buy today has largely not changed for the large oil companies as the oil was explored and drilled for years ago. The infrastructure to refine and deliver it has built years ago. Trucking costs for that oil has gone up as costs of drivers has increased. Companies that buy on the spot market, i.e. not the large boys, have seen those prices go up for a variety of reasons including shipping problems, war, etc.
Consumer demand for oil is fairly constant regardless of the price and oil companies and others know this. Few people are willing to make lifestyle changes because the price of gas has gone up.
During COVID obsolete refineries were shut down. With no hope of a return on investment, no upgrades or new ones are planned.
More dollars chasing less fuel = increase in price. Econ 101