We deserve to know the truth about gas prices
Published 7:08 am Thursday, June 23, 2022
The symbolism of President Biden’s recent and ill-fated bicycle ride had nothing to do with a fall to the pavement. However, if the price of gasoline continues on its current trajectory, voters will eagerly stream to the polls in November, even if it is on two wheels, rather than four.
As gas prices flirt with record highs on a daily basis, politicians in Washington are good at pointing fingers as to why filling the tank costs more than ever. They are less adept at offering solutions.
hey blame oil companies for profiteering, Russian President Vladimir Putin’s invasion of Ukraine and President Biden for implementing policies that are hostile toward the oil industry. Proposed solutions run the gamut from soliciting foreign adversaries to ramp up overseas production to gas tax holidays that could cost the Fed as much as $11 billion to suggesting everyone buy an electric vehicle.
Has anyone in D.C., checked out a nearly vacant new car lot recently?
Oil is the life blood of the world economy. It is how we move people and goods. It was trading at about $53 per barrel in January 2021. On June 22, that number was at $105.
West Texas Intermediate, a crude oil that serves as one of the global benchmarks for pricing, was $105 on June 22. It has topped $100 on many occasions in the past, but gasoline never approached current price levels in the past.
How the price of oil and the gasoline from which it is derived is determined is a complex global issue, not just an American one. It is based not only on supply and demand, but also on speculation of oil futures. Throw in a host of other factors such as a war involving the world’s third-largest oil producer in Russia, supply chain issues that affect exploration and production, labor challenges that infect every industry and a travel-hungry population emerging from the Covid pandemic, and pricing becomes even more volatile.
That said, Americans struggling to put gas in the tank and food on the table due to runaway inflation deserve honest answers and real solutions from elected leaders about these unsustainable conditions. Instead, we get finger-pointing, social media catchphrases, dismissive remarks about electric vehicles, stickers reading “I did that” and political posturing from those on both sides who are more concerned about a midterm power struggle than they are conversations about real-life issues taking place around the dinner table in every city and town across the country.
During his presidential campaign, Biden vowed to end new drilling on federal land, and once in office wasted no time implementing energy policies focused on eliminating within 5-10 years a U.S. dependency on fossil fuel.
On his first day in office, the president signed an executive order canceling the permit for completion of the Keystone XL pipeline that eventually would have delivered oil from Canada, Montana and North Dakota to U.S. refineries in the Midwest and Texas. The pipeline was not yet operational, so shutting it down has done nothing to limit current production. But the move has closed the door on future supplies of about 2 million barrels of oil per day. And since speculation plays a large role in pricing, the current administration’s oil policies are another piece of the puzzle whether they admit it or not.
The U.S. produces about 11 million barrels of oil per day, according to government statistics, and imports another 8 million barrels per day. Two years ago, domestic production was about 13 million barrels per day, while imports were about 6 million barrels per day.
As poll figures plummet and gas prices skyrocket, the president has unveiled a two-step solution that includes pandering to foreign adversaries for increased production while urging domestic producers – which recorded first quarter profits of $41 billion – to increase drilling and reduce prices, forgetting that the likes of Shell, Exxon, Conoco-Phillips and Chevron are publicly held companies answerable to stockholders, not politicians.
His pleas came the same week a sale of public land in New Mexico’s Permian Basin, the most oil-fertile land in the country, was delayed by the Bureau of Land Management.
Who can blame speculators if they are unable to wrap their arms around policies that include begging for help from an industry you intend to shut down within the next generation.
The factors weighing on the pricing of oil and gasoline are complex, but this is a discussion worth having considering the everyday effects on Americans and the economy. One would think in an election year that politicians longing to be on the right side of an issue would be eager to tell us the truth. We deserve that.
John Reitman is regional editor with Bluegrass Newsmedia.