Gas prices continue to soar and will go even higher

Editor’s note: This is the first in a two-part series addressing rising cost of fuel, the causes behind it, and the Biden administration’s actions against the U.S. oil and gas industry. Next week, the Weiser Signal American will take a look at climate change and alternative energy sources.
 
 Gas prices are breaking records across the country every day now and there does not appear to be an end in sight.
 On Monday, June 13, the national average hit a new all-time high of over $5 per gallon, with some states, including all west coast states, reporting an average of $5.22 to $6.43 per gallon. 
In Idaho, average gas prices, according to AAA, were hovering around $5.22 but the way things are going, that will likely change by tomorrow, maybe even by evening.
 In May, Global financial services provider JP Morgan predicted the national average would reach $6 or more by the end of the year.
 Consumers are experiencing a runaway market, causing people to second guess their travel plans and leaving most to wonder when the upward surge will finally level out, and whether we will ever see $2 a gallon gas ever again.
 One thing is for certain, the nation is floating in uncharted waters, and on many levels.
 There are some obvious causes. 
 AAA Idaho Public and Government Affairs Director, Matthew Conde, provided the Weiser Signal American with a bit more insight.
 “The main conversation is the price of crude oil,” he said. “Right now, we are around $121 a barrel. This time a year ago, we were probably $50 cheaper. Finished gasoline is 50 percent more based on the price of crude oil. 
 “The fact that the European Union is banning 90 percent of Russian crude oil by the end of the year, obviously the Russian invasion, and continued under production – not just OPEC (Organization of the Petroleum Exporting Countries) but here domestically – has resulted in a very tight crude oil market. With supplies being tight and now, with summer demand coming online, you see the result of intense upward pressure both on crude oil and gas prices.”
 Conde said that any time the market is uncertain, prices tend to go up as a sort of hedge mechanism.
 “For example, OPEC, they determined quite some time ago, years ago now, that they were going to drop production to keep the price of crude oil high,” he said. “At a few different times in the past year or so, they ramped up production, but they fell short of market expectations and so now, coming out of the pandemic, the market thought that OPEC would be more productive, and they haven’t been, so we are still quite a bit short of where we once were.”
 OPEC has decided to ramp up production to 640,000 barrels from 400,000 barrels a day, which is good news, but the increase will most likely be swallowed up by increased demand.
 “Domestically, we are probably 14 percent or so below where we were a year ago as far as crude oil inventories go, so there again, you have less supply out there and that does have a ripple effect across the entire system,” Conde explained.
Solutions?
 The Biden administration’s solutions have included asking OPEC to increase production, which it has done on a relatively minimal bases, and tapping into the nation’s strategic petroleum reserves. The administration has also recently invoked the Defense Production Act to expand clean energy production that some argue is not a good “right now solution” to the current problem.
 Tim Stewart, President of the U.S. Oil and Gas Association, in an interview with JusttheNews.com, said the domestic market is under attack by the Biden administration.
 “It’s a difficult time for all of us, for all of industry, and it doesn’t have to be this way,” he said. “We have had some significant policy and economic decisions that have put us in this situation, and it is really unfortunate. I used to chalk it up to maybe gross incompetence on behalf of the Biden administration and now I honestly think it’s negligence. Either way, there have been over a hundred different individual actions that have taken place since Jan. 20, 2021.
 “About every five days, the administration has taken some action against the oil and gas industry, which has made it difficult for us to do our job and now we find ourselves, 18 months later, where millions of people are in energy poverty. They have to make really tough decisions every single day and, like I say, it doesn’t have to be this way. It’s really unfortunate.”
 On Jan. 20, 2021, Biden revoked approval of the Keystone XL pipeline and imposed a moratorium on oil and gas leasing on federal lands and waters.
 About 25 percent of U.S. production comes from federal areas, according to a March FOXBusiness report, which stated that for policy-watchers it was confirmation that the administration’s actions are an intended tactic to block “midstream” pipelines to restrict “upstream” production.
 “The moves were part of Biden’s broader climate agenda and target to reduce U.S. greenhouse gas emissions by 50 percent by 2030 and achieve net-zero emissions by 2050,” wrote Dan Eberhart, CEO of Canary, LLC a Colorado-based drilling services company and managing partner of Eberhart Capital, LLC.
 Biden’s many other actions have included boosting the “social cost of greenhouse gas emission” increasing producers’ cost to deliver new supplies. 
 His call on OPEC to increase supply, Eberhart said, was a slap in the face for the U.S. industry, which is one of the three largest producers in the world and, “can deliver supply with a lower carbon footprint than most unregulated national oil companies” in what he describes as a “cartel.”
 Biden has also proposed a “methane fee,” which would effectively serve as a tax on natural gas production, which Eberhart said is, “counterproductive to energy security and economic growth in the U.S.”
 Fingers have been pointed toward the oil and gas industry itself for gouging consumers at the pump, a contention Stewart refutes.
 “It’s really tough from an oil and gas planning perspective to have a volatile price climate like this,” he said. “We don’t like it; we like it when prices are steady. We like it when prices are at a point where we can make money and we can reinvest into the infrastructure and the exploration and production, but we really hate the volatility that goes on.”
 Biden did make an unexpected about-face when he called on U.S. energy producers to step up domestic oil and gas output to address rising prices and the growing supply crisis prompted by the Russian invasion of Ukraine, as well as the subsequent sanctions on Russia’s oil exports.
 But the timing, according to the oil and gas industry, is suspect since the damage has already been done and there are no quick solutions, considering that the oil and gas market is a “long game,” which effects shareholders and their decisions whether to continue investing in the industry.
 “Well, to be honest with you, look at the timeline in which he (Biden) started offering solutions and the price of crude at the same time,” Stewart said. “Every time he’s offered a solution, it’s had an impact where it has caused the prices to increase … when an administration comes in and says, ‘We are going to sunset you as an industry; it is our policy goal while we are in office to make you go away,’ that has an incredible chilling effect on the investment community.”
 Stewart said he suspects very strongly that the climate issue, which many say is a scapegoat for a broader agenda, is behind the administration’s actions.
 “I’m getting to the point where I think a lot of this is artificially manufactured and it’s done primarily to implement the climate agenda,” Stewart said. “One of the issues I think we have, as you look at the administration trying to manage the global markets, the impact of the Russian invasion, they are doing.
 “Russian sanctions, as we’ve learned, can easily be worked around. If they really wanted to put pressure on Putin, they would do everything they could to massively increase production in the United States to provide the supply here. That would drive the global price of oil down, which would make it harder for Putin to finance his invasion.”

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