Higher Gas Prices on the Way
But a new study shows that it didn't have to be the way. Like it or not, Biden policies are largely to blame. And the November 8th mid-term elections are just 34 days away.
From the Wall Street Journal (emphasis added):
Oil prices rose Monday on news that the Organization of the Petroleum Exporting Countries (OPEC) and its allies may agree on Wednesday to cut production. The Saudis and Russia are underscoring the folly of President Biden’s limits on oil and gas production, and his non-emergency release of oil from the national petroleum stockpile.
A couple of months ago Mr. Biden sojourned to Saudi Arabia to beg the Crown Prince for help containing surging U.S. gasoline prices. Now it looks like the meeting was worse than unproductive. Reports say OPEC and its allies including Russia will consider slashing their production targets by a million barrels a day when they meet this week.
Analysts estimate this would lift crude prices to about $100 a barrel from the $80 to $90 range of the last month. OPEC countries may be seeking to boost their budgets to cope with rising food prices and the strong dollar. But the timing couldn’t be worse for Mr. Biden and Democrats in Congress.
The Administration has released 200 million barrels or so from the Strategic Petroleum Reserve over the past year and about one million barrels a day in recent months. These drawdowns were scheduled to end this month, but the Administration recently extended the releases into November, no doubt worried that a taper would increase gasoline prices before the midterm election.
But oil traders aren’t naifs. They know the releases will soon end and the Administration will also have to start refilling the reserve, which is at its lowest level since 1984. Much of the oil that remains can’t be efficiently processed by U.S. refiners. So if there were a true national emergency—say, a cyber attack on a major oil pipeline—the U.S. might not have enough inventory to keep supply flowing.
To refill the reserve, the Administration may soon have to buy oil at a higher price than it has been selling it. Sell high and buy higher wasn’t supposed to be the strategy, Mr. President. A smarter strategy to reduce U.S. energy prices would have been to encourage more domestic production.
A new study by the Committee to Unleash Prosperity estimates that the U.S. would be producing between two and three million more barrels of oil a day and between 20 and 25 more billion cubic feet of natural gas if the Trump Administration’s policies had continued. Economists Casey Mulligan and Steve Moore say the Biden Administration’s anti-oil-and-gas policies are costing the U.S. economy $100 billion a year.
About that CTUP study; Under Trump Administration policies:
The U.S. would be producing between 2 and 3 million more barrels of oil a day
The U.S. would be producing between 20 and 25 more billion cubic feet of natural gas
U.S. GDP would be increased by roughly $100 billion a year
The Biden administration has sent conflicting messages to the U.S. oil and gas industry. On one hand, Biden has promised to set the U.S. on a course of eliminating U.S. oil and gas over the next two decades. He has said that his long-term goal would be to “shut down” oil and gas production as part of his climate change strategy. He has also canceled pipelines, reduced drilling on public lands, and instituted tough new environmental standards that raise the cost of drilling. His new climate change legislation imposes new taxes on the oil and gas industry.
On the other hand, he has said multiple times he is “doing all I can” to reduce gas prices at the pump. He also claims that the U.S. is near “record levels” of oil and gas production in his first year-and-a-half in office.
This study examines what has happened with oil and gas production when we adjust for the large increase in the world price since Biden entered office. We find that Biden’s policies have shifted the energy supply curve such that we are producing less oil and gas at the range of current price levels that we would have with the Trump energy policies still in place.
The U.S. would be producing between 2 and 3 million more barrels of oil a day and between 20 and 25 more billion cubic feet of natural gas under the Trump policies. This translates into an economic loss – or tax on the American economy – of roughly $100 billion a year.