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Gas Problems
Author: BobR    Date: 2022-03-09 12:00:00

If you drive a petrol-fueled vehicle, it's been impossible to ignore the price of gasoline creeping up. There are several reasons for this (some obvious; some not so obvious), but to hear Republicans tell it, it's all President Biden's fault. This is nonsense, of course, and for reasons we'll get to in a minute, but in response to these economic experts (who were previously medical experts who "did their own resurch"), let's get some facts together that they cannot refute.

Inflation: Inflation is hitting most sectors of the economy, but gas especially hard. If you want to blame Biden for this, then it's because his efforts to fight the COVID-19 pandemic were so successful here at home. With people traveling more, going into their work more, and just going out more, the demand for gas has gone way up (as has the demand for other goods). This was initially referred to as "the supply chain", and the results of that are showing up on price tags everywhere. This leads into...

Supply-and-Demand: It's basic capitalism 101... The supply isn't meeting the demand. This happened in the 70s when OPEC cut production. and again in 2008 (when Dubya was president).

Why is the supply down? Is it because of the war in Ukraine and the U.S. not importing oil from Russia. No - the prices were already going up before the war started, and we don't get that much oil from Russia anyway.

Slashed Production: Oil production was slashed in 2020. Not by President Biden, though. It was The Former Guy who convinced OPEC and Russia to slash production to save the oil companies here at home:
Saudi Arabia and Russia typically take the lead in setting global production goals. But President Trump, facing a re-election campaign, a plunging economy and American oil companies struggling with collapsing prices, took the unusual step of getting involved after the two countries entered a price war a month ago. Mr. Trump had made an agreement a key priority.

It was unclear, however, whether the cuts would be enough to bolster prices. Before the coronavirus crisis, 100 million barrels of oil each day fueled global commerce, but demand is down about 35 percent. While significant, the cuts agreed to on Sunday still fall far short of what is needed to bring oil production in line with demand.

The plan by OPEC, Russia and other allied producers in a group known as OPEC Plus will slash 9.7 million barrels a day in May and June, or close to 10 percent of the world’s output.

Domestic Production: So why aren't we producing more oil here at home? "Drill here, Drill now", right? Aren't Biden's "policies" reducing our oil production here? Well... actually... no. First of all, the Biden administration has actually increased the number of leases to oil companies, much to the chagrin of environmentalists:
New federal data shows the Biden administration approved 3,557 permits for oil and gas drilling on public lands in its first year, far outpacing the Trump administration’s first-year total of 2,658.

Nearly 2,000 of the drilling permits were approved on public lands administered by the Bureau of Land Management’s New Mexico office, followed by 843 in Wyoming, 285 in Montana and North Dakota, and 191 in Utah. In California, the Biden administration approved 187 permits — more than twice the 71 drilling permits Trump approved in that state in his first year.

“Biden’s runaway drilling approvals are a spectacular failure of climate leadership,” said Taylor McKinnon at the Center for Biological Diversity. “Avoiding catastrophic climate change requires ending new fossil fuel extraction, but Biden is racing in the opposite direction.”

It's the oil and gas companies who are crying wolf, acting like they have nowhere to drill:
Following a popular commitment made on the campaign trail, President Joe Biden instituted a pause on new oil and gas leasing on national public lands while the U.S. Department of the Interior conducts a review of the program. Importantly, the targeted pause does not affect oil and gas under state, tribal, or private subsurface ownership. It is a commonsense move that will allow the administration to become a better steward of the public lands owned by all Americans, from ensuring that the public is involved in land management decisions to providing a fair return to taxpayers for the use of their resources.

The response from the oil industry, however, has been nothing short of dramatic, claiming that the pause will drastically affect production and jobs. A new Center for American Progress analysis finds that these statements are outright false. In reality, companies could continue to begin new drilling operations on unused leases at the current rate for at least the next 10 years without access to any new leases. Despite the industry’s “sky is falling” claims, federal oil and gas development is unlikely to change substantially with a pause on new leasing because the industry already has access to so many acres of public lands.

I'll leave you with a couple charts showing domestic oil production and gas prices. Those with long memories will not be surprised.
http://www.FourFreedomsBlog.com/uploads/DomesticOilProduction.png

http://www.FourFreedomsBlog.com/uploads/GasPrices.png

 

7 comments (Latest Comment: 03/09/2022 16:53:16 by Scoopster)
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