Oil used is only about half the cost of creating a unit of gasoline. The rest of the stuff involves refining, transportation, taxes, etc. here’s a recap of some of the things that happened already that increased domestic costs and reduced US oil production, things which in part also contribute to the higher oil prices you observed. We were, under Trump anyway, the #1 country producing oil so our internal policies do impact the global price.
Biden and his running mate both promised to stop fracking. Immediately after he was elected, Biden paused all oil and gas leasing on federal lands. He then killed the Keystone XL pipeline and the many thousands of jobs it supported, claiming the pipeline did not serve the U.S. national interest. Only a few months later, he supported removing sanctions on the Nord Stream 2 pipeline, handing a major energy and international policy win to Russian President Vladimir Putin and oil giant Gazprom.
While the president’s anti-energy policies stifled domestic production and raised prices on consumers, Biden again snubbed American energy producers by going on bended knee to OPEC and pleading for the oil cartel to boost production… OPEC rebuffed his request.
I’m old fashion, but I think I’d rather have more domestic production and energy independence than some “environmental justice”.
How does a promise increase costs or reduce production?
Paused NEW leasing – how does this increase costs or reduce existing production?
The pipeline was not finished or operational – how does this increase costs or reduce production?
That’s gas, not oil, and has nothing to do with what we’re talking about.
According to the EIA data, USA produced 10% more oil in the first 7 months of 2021 (all of the currently available data) than in the first 7 months of 2020. It appears to be 8% less than the first 7 months of 2019 (just being fair due to likely demand drop during last year’s pandemic). But this still does not seem to support the argument that “our energy policy” had anything to do with reduced US oil production, nor actually prove that there was a reduction at all. If anything, the industry was probably hammered by the drop in both demand and prices last year (which briefly cratered to something like -$37 per barrel IIRC), and it’s taking time to recover to pre-pandemic levels.
I would also predict (and some articles in the news seem to support this) that our oil production is bound to increase even more now, because the high prices make more expensive operations viable.
Also let’s not look at 18 months when we can look at 10 years:
Our domestic production doubled since 2011, but that doesn’t seem to affect prices at the pump at all. The prices at the pump are very much correlated with the price of crude oil.
If it’s a big enough sustained move, sure. At the margin though, stuff like the tax bill stripped oil and gas tax breaks, banks and endowments divesting of fossil fuel stocks under ESG promoted mandates, and the threats of increasingly hostile regulations under Biden’s EPA / Democratic legislation (including higher corporate tax rates) have been pushing up the cost of capital for all of the fossil fuel energy sector and that’s definitely not helping. Plans to restore operations in higher cost fields, offshore, oil sands, etc, all have large resumption costs that must factor in these forward looking probabilistic expenses.
To the extent these result in marginal oil production shifting from US domestic to OPEC abroad, that impacts the US consumer by incurring additional transport costs and so forth, not to mention offshoring our associated oil services sector jobs. Even pre-pandemic in 2019 the US had become a net exporter of petroleum products. That’s no longer the case under Biden, although how far it will swing towards substantial imports remains to be seen.
Absolutely. If you wanted to do a proper analysis of the recent price increases in gas, you’d want to take that historical correlation say over the last decade, build a regression model, and strip out the expected changes due to the oil price moves we’ve seen and look at the recent residuals to see if domestic policy seemed to be systematically impacting the gas price ex the oil price.
I don’t care that much, but if someone wants to build the monthly model in excel or R or something, it’d be interesting to see the results.
I don’t think we’re about to lose control of inflation," she said, although she agreed that the US is going through a period of inflation that is higher than before. “It’s something that’s obviously a concern and worrying them, but we haven’t lost control.”
This is not exactly the kind of rhetoric that inspires confidence in the central bankers ability to control inflation if you see what I mean.
An inflation surge is presenting a fresh challenge for Mr. Biden, who for months insisted that rising prices were a temporary hangover from the pandemic recession and would quickly recede. Instead, the president and his aides are now bracing for high inflation to persist into next year, with Americans continuing to see faster — and sustained — increases in prices for food, gasoline and other consumer goods than at any point this century.
Regarding Canada, note that while they stopped buying more treasuries, they will not be letting their existing holdings mature.
The headline is “ends quantitative easing”, but in reality, this is a reduction from $2 billion per week to $1.3 billion per week, which is enough to keep its $425 billion load of government treasury bonds level (the average duration of the Bank of Canada’s portfolio is 6.2 years, with most of it front-loaded in the first five years).
I did not get the point of his slides. He may be recommending that the Fed stop pouring gasoline on the inflation fire but he certainly didn’t come out and say it directly.
OPEC decided to mostly hold the line and charge the world who wants more “green” energy restrictions at home a premium for their product.
WHITE HOUSE SPOKESPERSON SAYS OPEC SEEMS UNWILLING TO USE ITS POWER TO HELP GLOBAL ECONOMIC RECOVERY
See that’s thinking like a communist - everyone should work together, instead of expecting other countries / people to act in their rational self interest. OPEC: “Charge more because you guys are being dumb? Great, let’s take that to the bank.”
WHITE HOUSE SPOKESPERSON SAYS BIDEN ADMINISTRATION WILL CONSIDER FULL RANGE OF TOOLS TO BOLSTER ENERGY MARKET RESILIENCE
Removing the tax penalties in the spending bill I’m sure never crossed their minds… Probably he’ll just open up to Iran and give up nuke sanctions so we can get more (legal) oil and cheaper prices at the pump or something similarly shortsighted.
Brandon is such a jackass. He urges more foreign oil production, as you posted, out of one side of his mouth. Meanwhile he threatens the futures of important oil producing nations with the green drool spewing out of the other side of his mouth. Is it any wonder China, Russia, and the Saudis are calling BS on this clown?
Today, Senator Ted Cruz (R-Texas) introduced the Capital Gains Inflation Relief Act , a bill that would index many assets to inflation to protect taxpayers from paying taxes on inflationary gains. Rep. Warren Davidson (R-Ohio) introduced the same bill in the House of Representatives.
“Senator Cruz should be commended for reintroducing the Capital Gains Inflation Relief Act. Not only does this bill end the unfair practice of taxing inflationary gains, but it will help grow the economy by encouraging saving, investment, and innovation. It is always a good idea to index capital gains to inflation but because of Joe Biden’s inflation, it is more important than ever to do it now,” said Grover Norquist, President of Americans for Tax Reform.
Senator Cruz’s legislation would index to inflation any common stock in a C corporation, digital assets, and any tangible property which is a capital asset or property used in the trade or business.
