Gas prices in the United States have increased a lot over the last eighteen months and currently stand above $4 per gallon. If prices continue to rise or stay at their current elevated levels, that could cause financial hardship for many families and cause political problems for Democrats ahead of the coming midterm elections.

According to most reporting on the topic, gas prices have increased because global demand for oil has increased faster than global supply of oil. The supply of oil is being held back by the Organization of the Petroleum Exporting Countries (OPEC), which refuses to significantly increase its production quotas, by the Russian/Ukrainian war, which has led to sanctions and boycotts that are stranding some of Russia’s oil production, and by American oil companies, which refuse to expand domestic oil production.

One of the reasons that American oil companies are not expanding domestic production is that their owners and financiers generally do not want them to do so. These investors fear that production-expanding investments in the oil sector are extremely risky and may not pay off. This fear appears to be justified by recent experiences in the sector where massive investments in fracking succeeded in producing a lot more oil while also delivering giant financial losses to investors.