The average price of truck diesel rose from $4.836 to $5.341 through the first four weeks of October, and it could soon be flirting with the record-high of $5.810 set in June.
The U.S. was considered energy independent in 2019, with peak oil production topping 13 million barrels daily. During the pandemic-driven economic slowdown, the country enjoyed the lowest prices in decades due to national and global surpluses. American oil production has not exceeded 12 million barrels per day since the height of the health crisis. Despite the U.S. being effectively underwater in terms of meeting petroleum needs, oil exports recently set an all-time record.
“Low fuel inventories headed into winter — and against the backdrop of midterm elections — have been a key focal point for the Biden administration, which has mulled instituting export curbs among other options to bolster supplies. Doing so could save US consumers $5 billion in gasoline costs, according to analysis by WoodMackenzie released Tuesday — but could raise diesel costs by $2 billion to European trading partners and erase $30 billion in earnings from American refiners,” according to Bloomberg. “Exports of crude alone also hit a new high of 5.1 million barrels a day, with the pull from Europe strong through October.”
Passenger vehicle gasoline recently spiked and the East Coast faces shortages of home heating oil. Concerns about potential gas and heating oil rationing have working families on edge. And although the Russian invasion of Ukraine has been a convenient source of blame, the White House has made its fossil fuel energy policy abundantly clear.
The Biden Administration had all but killed oil drilling on public lands, consistent with a 2020 campaign pledge by the president that involved, “banning new oil and gas permitting on public lands and waters.” The Department of the Interior has been roundly criticized for slow-walking drilling permits and sued over efforts to change regulations, making permits excessively expansive and difficult to acquire.
“The Department of the Interior will only apply to 173 parcels on roughly 144,000 acres of land. This is actually 80 percent less than what was initially proposed for leasing and represents just 0.00589 percent of all federal land. In addition, the department said new leases would come with a royalty rate of 18.75 percent, up from 12.5 percent,” according to Real Clear Energy.
With the U.S. needlessly reliant on foreign oil production, the OPEC+ group aligned with Russia recently announced a reduction of 2 million barrels daily. This move comes after Pres. Biden asked the Saudis to increase output, in an effort to tame prices. Ironically, the Biden Administration’s anti-fossil fuel policies and embargo on the purchase of Russian oil resulted in Big Oil raking in massive profits.
According to the Wall Street Journal, Exxon posted a $20 billion profit during the third quarter, a new high-water mark for the corporation. Some finger-pointing has occurred, claiming Big Oil is gauging consumers. But the supply and demand metrics, coupled with the massive European shortages caused by the Russian oil ban, drove up Big Oil’s profits. Oddly, these corporations did little to improve their revenue except sell their products to the highest foreign bidders.
Everyday Americans are fast-learning the consequences of not maintaining energy independence — shortages, inflation, high prices at the pump, and freight transportation outfits having to raise rates that are passed along to consumers.
Sources: eia.gov, bloomberg.com, ajot.com, reauters.com
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