Brie Olootu pumps gas at an Exxon Mobil gas station on June 9, 2022 in Houston, Texas. Gasoline prices are hitting record highs as demand increases and supply fails to keep pace.
Brandon Bells | beautiful pictures
WASHINGTON – When the White House publicly promotes gas prices downBehind the scenes, officials fear prices could rise again as they continue to look for ways to get more oil on the market.
The White House used a drop in average gas price fell below $4 last week to underscore President Joe Biden’s response to record-high oil prices and repel Republicans who have blamed him for earlier price increases.
However, oil traders, industry executives and former administration officials warn that prices could easily rebound as the many issues that contributed to the spike in early summer remain a problem. factors, such as limited refinery capacity and uncertainty surrounding Russia’s war in Ukraine. Industry experts say the White House has had limited impact on the recent drop in prices, instead with fears of a recession as the Federal Reserve raised interest rates, sending consumers a slight dip. . request due to previous high prices and an increase in global production.
Daniel Yergin, vice president of S&P Global and author of “The New Map: Energy, Climate, and the Clash of Nations.”
Administrative officials pointed to a Treasury Department analysis shows that Biden’s decision to release 180 million barrels of oil from the Strategic Petroleum Reserve has contributed to a drop in gas prices by more than $1 since the June peak, with similar releases by other countries. another country, plus another 11 cents. decline.
Gas prices are displayed at an Exxon gas station on July 29, 2022 in Houston, Texas.
Brandon Bells | beautiful pictures
But there is no indication of Biden’s other efforts, such as publicly shaming oil and gas companies over their record profits, calling for an emergency meeting with executives and threaten According to industry experts, to pull unused drilling permits, has affected the price or production. While oil production increased, it did so at the same rate as expected before Russia invaded Ukraine.
“There isn’t really a single policy that we can show you to help the situation,” said Geoff Moody, vice president of government relations for the US Fuel and Petrochemical Manufacturers. “There’s a lot of things that they’re considering that they haven’t done that will really aggravate the situation. So to the extent that they want to give credit to anything, I would say it’s by not interfering.”
Although gas prices have dropped since earlier this summer, they are still close to their pre-pandemic highs. A gallon of gas is about 75 cents higher than it used to be at this time last year and a dollar above pre-pandemic 2019 levels, causing demand to drop and producers and refiners to cut output.
While welcoming the recent drop, administration officials conceded that prices could rebound, though they expect prices to fall a bit more as demand typically falls in the fall. “This is a global market. Anything can happen, especially as it relates to what is happening in Russia and Ukraine,” an administration official said.
Energy Secretary Jennifer Granholm pointed to a report from the US Energy Information Administration forecasting a price drop to $3.78 per gallon in the fourth quarter, said in an interview on CNN last Sunday (August 14), “We expect that’s true, but, again, it can be influenced by what’s going on globally.”
One step the administration is looking to take to encourage oil companies to increase production is to ensure that they will be able to sell their oil to the US government at a fixed price when it starts supplying some barrels again. that Biden sold off from Strategy. Petroleum Reserve.
U.S. Energy Secretary Jennifer Granholm speaks during a press conference at the White House in Washington, April 8, 2021.
Kevin Lamarque | Reuters
In the past, the federal government paid the market rate when the oil was delivered, which could be higher or lower than the price when the contract was signed. The official said offering a fixed price now could remove some of the risk for oil companies investing in new drilling operations that can take months or years to start up. .
The administration is also trying to strike a deal with other European and Asian allies to impose price caps on Russian oil in a bid to drive down gas prices and cut Kremlin revenue. The countries agreed to the price ceiling in the G7 meeting in June with the goal of releasing by the end of the year. But industry analysts have warning it could backfire and push prices higher if Russia reduces production as a result, creating an artificial shortage.
A fundamental problem is the lack of refineries to process oil into gasoline after five closed during the pandemic as demand for gas fell. And, next year, a Lyondell refinery in Houston that produces more than 200,000 barrels per day is expected to close.
Another fundamental issue that remains is the tension between Biden’s climate goals, which focus on the transition away from fossil fuels, and the need for oil companies to ramp up production to meet the constant needs of consumers.
The White House regularly talks with refineries to try to identify ways to help keep production online and bring closed refineries back, administration officials said. In a sign of progress, PBF Energy recently restarted production at a refinery in New Jersey with an additional capacity of 50,000 bpd, the official said.
“We’re trying to solve those problems just like we do in other areas of our supply chain, whether it’s ports or baby formula,” the official said. “Although these are private transactions, the government can play a role in trying to remove any barriers if it is in the public interest.”
