Average gas prices hit an all-time high of 5 dollars and 2 cents per gallon last week, that’s up 40 percent from $3.40 last December.

The reason is simple, the U.S. oil and gas industry is linked to a vast global market and there is not enough supply for our current demand.

The Coronavirus and the Russian invasion of Ukraine have buffeted global oil prices. The answer seems simple – just ramp up output, but it’s not like turning on a spigot.

Companies cannot immediately pick up where they left off. It takes up to eight months, and that doesn’t account for pandemic-induced shortage of labor and materials.

The other problem: As the U.S. and World shift away from fossil fuels and toward renewable energy and electric vehicles – long-term profits don’t seem like a safe bet.

“The administration is constantly putting more regulations on the industry and trying to tax them. Well how do you get these companies to invest in the facilities and additional energy production when they are constantly seeing an administration that wants to shut them down,” posed U.S. Senator John Hoeven.

As a result, oil companies are feeling pressure from Wall Street to use profits to reward shareholders rather than invest in new production.

“A lot of oil companies don’t want to right now. They’ve got private land that the U.S. government has no control over, and they’ve got a backlog of drilling permits on Federal land. Many of them are not being used. There is a reason why, well frankly the oil industry is telling its investors we would rather be turning our cash back to you our investors rather than producing more oil,” explained The Institute for Energy Economics and Financial Analysis (IEEFA) Energy Finance Analyst Clark Williams-Derry

Even if production spiked tomorrow, it could not immediately be refined into gasoline.

“One of the bottlenecks is refining capacity, and they are expanding the refining capacity, but remember when they make those investments they have to recoup that investment over a period of time, and if the administration is saying no we’re going to basically put you out of business, how do you make that investment,” said Hoeven.

Since 2019, the U.S. has lost more than 5 percent of its refining capacity, more than a million barrels per day. Refineries have either shuttered or refitted to biofuels.

“Because of activist pressure, this ESG pressure, or climate change pressure, on refineries, they have shifted – because they can’t get financing to increase capacity, they have shifted financing over to biofuels, well we don’t need more biofuels, we need more oil,” said Western Energy Alliance President Kathleen Sgamma.

The trend has mirrored in the rest of the world, with 2 million fewer barrels per day refined globally.

And, just like drilling, gas producers are reluctant to make the investments required to expand refining capacity.

Biden’s efforts to release millions of barrels per day from the strategic petroleum reserve, and his proposal to suspend a federal gas tax, would bring consumers little relief.

“With the gas tax moratorium or holiday, or whatever you want to call it. You do something like that you actually don’t help the long-term problem because what you’re doing is you’re saying I am going to support demand whenever I should be wanting demand to decrease,” explained IEEFA Financial Analyst Trey Cowan.

Analysts contend that the Republicans’ proposal to open more federal lands to drilling would not yield long-term relief.

“Most of the action in the U.S. is on private land. You think about Texas. Most of the Oil Industry in Texas has it on private land. Same thing in North Dakota. A lot of the production happens on private land. And, so this focus on what the Federal government can do, kinda distracts from what the oil industry can do, ” said Williams-Derry.

Instead, companies are using their record profits this year to reward CEOs and shareholders.

“We’re actually enjoying high prices, we’re generating cash. We’re not drilling so much, we’re saving money on drilling. We’re generating dividends and share buybacks. So, it’s the oil companies themselves saying look we don’t want to produce more right now,” said Williams-Derry.

But, at the same time, there is little incentive to expand production, given the political and social pressure to wean the nation off of fossil fuels to slow climate change.

The world needs more oil output today but is calling for less tomorrow.

That’s a difficult needle to thread.