Why Are Gas Prices So High If the U.S. Is Energy Independent?
Unfortunately, energy independence can’t keep U.S. gas prices down, and it isn’t enough to protect your stock portfolio either. Here’s why, and what worried investors should know.

We’ve all seen the rising cost of oil and its ripple effect through the economy, especially on prices at the pump. You may have also read that the U.S. is energy independent or that we export more oil than we import and that Russian oil only makes up 3% of all U.S. oil imports.
So why are oil and gas prices so high in the U.S.? The national average price for a gallon of regular gasoline was $4.24 as of March 30, up from $2.87 a year ago, according to AAA.
Prices Are Global, Not Local
A fundamental economic concept called the law of one price can help us understand what is going on. In short, this concept explains that even though the U.S. produces more oil than we use domestically, we buy and sell it on the global market. This means that buying pressures and supply shortages in other parts of the world impact the cost here, even if we produce oil here and use it here. In fact, there is money to be made if you can buy oil in the U.S. at a different price. You could buy in the U.S. then sell internationally and profit from the price difference.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
It’s precisely this market force that causes oil — or any other commodity — to trade at one price worldwide. So, even being energy independent, we are still affected by the behavior of the (other) largest oil-producing nations (including Russia, Saudi Arabia, etc.).
Source: U.S. Energy Information Administration
What Does This Mean for Your Portfolio?
Besides the pain at the pump, higher oil prices can erode buying power as input and transportation costs for goods and services rise. Protecting one’s portfolio from inflation can be an imperfect science. Gold, commodities, Treasury inflation-protected securities (TIPS) or even bitcoin all offer some level of peace of mind, but each has its quirks.
While not a direct hedge, investors may also want to consider allocating more dollars to companies involved in renewable energy. Over time, as fuel costs rise, one can expect a greater focus and demand for sustainable energy alternatives.
The implications for sustainable energy go beyond climate impact. Russia’s invasion of Ukraine has cast oil dependence in sharp relief, as oil revenue powers the Kremlin. Less demand for oil can mean less dependence on and funding to Russia, as well as other countries whose practices and policies may not align with investor values.
Natural resources may be randomly distributed around the world, but your investments don't have to be.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Adam Grealish serves as Head of Investments at Altruist, a fintech company on a mission to make great independent financial advice more affordable and accessible. With a career rooted in financial innovation, Adam most recently led Betterment's strategic asset allocation, fund selection, automated portfolio management, and tax strategies. In addition, he served as a vice president at Goldman Sachs, overseeing the structured corporate credit and macro credit trading strategies.
-
Living Beyond Age 100: A Possibility With Financial Impact
Living longer raises important financial and lifestyle questions.
By Dennis McNamara Published
-
What's Going On With the SALT Deduction?
The Tax Letter The state and local tax (SALT) deduction is a key sticking point in President Trump's tax plan.
By Joy Taylor Published
-
Student Visas: Older Americans' Ticket to Living in Europe
Do you envision strolling about Europe, a book in one hand, a glass of wine in the other? You could make that happen by studying there, even if you're older.
By Kim Englehart Published
-
Three Reasons It May Be Time for an Annuity 'Refresh'
Because of higher interest rates, inflation and newer annuity products, you could get a better deal today. Don't wait, though: Interest rates could start falling.
By David S. Corman Published
-
Three Common Cash Flow Mistakes and How to Fix Them
Better cash flow management could have a bigger impact on your retirement savings than simply making more money. Here's how to manage that.
By Mike Decker, NSSA® Published
-
Trusts for Child Influencers: What Families Need to Know
As video blogging, or vlogging, gains popularity (and profitability), new laws are shaping financial obligations for caregivers of young creators.
By Stephen B. Dunbar III, JD, CLU Published
-
Three Easy Financial Tips to Help Make This Year a Success
Early in a new year is the perfect time to assess where you are financially. Start by ensuring you're protected from fraud and evaluating your investments.
By Matthew Sommer, Ph.D. CFA® Published
-
Are You a 'Midwestern Millionaire'? Four Retirement Strategies
Midwestern Millionaires might not live in the Midwest, but they share a saver's mindset. These strategies are for those who have saved $1 million or more.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Happy Valentine's Day: Are You Committing Financial Infidelity?
You may not even realize you're betraying your partner's trust regarding money issues. Here are some strategies to prevent and address financial dishonesty.
By Neale Godfrey, Financial Literacy Expert Published
-
As You Celebrate Your Love, Consider a Financial Check-In, Too
Talking about your money situation with your significant other early in a relationship can head off disagreements and even breakups.
By Kelsey M. Simasko, Esq. Published