Hold onto your wallet: President Biden just banned imports of Russian oil. While this move only makes sense strategically — why in the name of God would we buy something crucial from the aggressor in a war we claim to be against? — the move is also expected to make the fuel price crisis in the United States even worse.
But fuel prices were already staggering to begin with. How did this happen?
Here are seven factors that are contributing to the crippling prices we’ve all been paying to get to work, travel, and heat our homes:
COVID-19 shutdowns and other restrictions
In the spring of 2020, COVID-19 shutdowns caused the United States to produce three million fewer barrels of oil per day (from almost 13 million BPD to less than 10 million BPD). We never really recovered from this production deficit, and then the restrictions were lifted.
Now, people are out and about again. Businesses are open and workers are commuting once more. The travel industry is back. All of this is taking a lot more energy than people had been using for the previous two years, and the market has tightened up considerably.
Biden and Congress’s “green” policies
Very few people are stupid enough to look at California’s energy policies and say, “That looks awesome! We should do that!” Sadly for us, all of those people are currently in office and making policy decisions.
California has tons of fossil fuel resources. In the mid-1980s, the state was the second-biggest oil producer in the country. But California’s leftist politicians have collapsed the state’s oil production since then by beating it down with environmental protections. They adopted a Low Carbon Fuel Standard (LCFS) which disqualifies the heavier crude produced locally and in Canada. They refuse to allow industry development for extracting oil from their plentiful formations. Both fracking and offshore drilling are crushed under taxes and regulations, and permits are incredibly difficult and expensive to obtain.
The Biden administration and congressional Democrats have been working to roll these policies out nationwide, causing oil and gas prices to keep climbing.
The Biden administration has dimmed oil futures
The White House started attacking domestic production of oil and gas on day one. While these policies haven’t demolished all current production levels (the Keystone XL pipeline was still being built, so we didn’t lose any net flow when it was halted, for example), they have retarded our ability to develop and produce oil and gas in the future. When current fields are tapped out, there won’t be much new development to turn to. Oil contracts based on predicted future prices are going to reflect that.
Oil is a global commodity
When major producers reduce their output, there is less oil on the market overall. Whether because of self-imposed limits to achieve “green” goals (like what Brandon has been doing in the U.S.) or political instability, many major oil countries are producing (or promising to produce) less right now. For example, Russia’s invasion of Ukraine has sparked panic over possible disruptions to its production and export, driving prices up even more.
OPEC+ nations are following their export limiting agreement
This conglomeration of oil-producing countries, which includes Russia and Iran, settled on a production increase plan last summer to adjust for post-pandemic demand. (In 2020, they cut production by ten million BPD.) OPEC+ agreed to increase production by 400,000 BPD every month, and they’ve been sticking to the plan — no matter how much Joe Biden or anyone else begs them to step it up. OPEC+ delegates are predicting an oil surplus later this year, so they will keep output low and steady to protect themselves from price drops later.
We’re importing most of our fuel now
Fewer pipelines and domestic production means we not only have to pay more for the oil we use, but we also have to pay for it to be shipped here from around the world on tanker vessels and distributed around the country by trains and trucks. That takes additional fuel, infrastructure, and workers. Not to mention that supply chain issues and worker shortages have further increased the costs for all this additional infrastructure, driving up delivery prices even more.
Every year around now (March and April), according to Forbes, “many U.S. refineries are taken offline for annual maintenance and all refiners are switching from manufacturing a handful of winter blends of gasoline to the dozens of summer blends required by the EPA. This changeover invariably raises the costs of both refining and transportation of gasoline, and that is always worked into gas prices during these months.”
Ahead of Biden’s announcement today, JunkScience.com founder and author Steve Milloy stated, “While we should not be funding Putin’s war against Ukraine by buying Russian oil, the reality is that oil is a global commodity. So Putin will sell his oil elsewhere, like China, and global prices will continue to rise. The only way out of this crisis is to unleash the US energy industry, which the Biden regime refuses to do because doing so would wreck its pointless and economically disastrous climate agenda. Contrary to Biden regime claims, it is not doing anything to reduce gas prices. It is in fact doing just the opposite, for example, by blocking new oil and gas drilling in defiance of a federal court order, and blocking new pipelines on the basis of climate. Biden’s move to ban imports of Russian oil will further serve his climate agenda by raising gas prices even more. As Putin wars against Ukraine, Joe Biden is not letting the resultant energy crisis go to waste – he is warring against American consumers and US national security in the name of climate.”