Keep it cut11/6/2022 In an effort to reduce prices at the pump, some lawmakers have called for a ban on crude oil or product exports. More consistent policy signals would be helpful. But the administration continues to blame gasoline retailers for price gouging. Recent meetings between the Biden administration and the oil industry have been more constructive, including discussions about waiving Jones Act restrictions on shipping to lower prices. The White House criticizes companies for their dividends and share buybacks, but it has not engaged Houston and Wall Street to help reshape investor expectations and corporate drivers. The Biden administration has pushed oil and gas companies to increase supply, but suggests that fossil fuels will only be required for a limited time-perhaps five to seven years-before a rapid energy transition kicks in. The energy market challenges are daunting, but the White House response has been muddled. Prices at the pump reflect these links to global market conditions. The market has evolved this way for a reason: to maximize efficiency in delivering crude oil and petroleum products. But because it is a big country with demand centers often located far from producing areas, it both imports and exports crude oil and refined products like gasoline and diesel from various regions. The United States is now a net exporter of petroleum (including both crude oil and refined products). Nonetheless, “energy independence” remains a mirage. The country is the world’s largest oil and gas producer, and following a steep drop after Covid-19, production is rising again. This is not just a supply problem, and the shale oil and gas boom has not insulated the United States from global oil shocks. Both upstream and downstream factors are creating upward pressure on prices at the pump. Aside from China, global spare refining capacity is limited. Stronger demand has also exposed insufficient refining capacity, as some struggling refineries closed in recent years while others converted to produce biofuels. The Organization of the Petroleum Exporting Countries (OPEC) has struggled to meet its monthly output targets and has very limited spare capacity. Shortages of labor and equipment are hindering production growth in the United States, and after years of poor financial performance, companies are under pressure to control spending and maximize investor returns. But the supply response has been sluggish. Globally, oil demand came roaring back after Covid-19, as commuting ramped up and consumers desperately wanted to travel again. It is misleading to blame the White House for current market conditions. To avoid unforced errors, policy moves should pass a simple litmus test: Will they encourage near-term oil supply or help cut oil demand? If not, these moves will likely be counterproductive. To its credit, the Biden administration wants to help consumers get through a challenging time, but some of the proposed interventions could backfire. Oil prices and gasoline prices are now beginning to drop, but energy costs are still a big political challenge. President Biden has called for a three-month holiday from the federal gasoline tax, and there are frequent reports of new policy ideas under consideration by the White House or Congress. There is always pressure to “do something” when pump prices soar, but the White House has a limited toolkit. To Boost Energy Security, Keep It Simple: Add Supply, Cut Demand Responding to Egregious Human Rights Abuses.Building Sustainable and Inclusive Democracy.Family Planning, Maternal and Child Health, and Immunizations.Energy, Climate Change, and Environmental Impacts.Weapons of Mass Destruction Proliferation.Defense Industry, Acquisition, and Innovation.Intelligence, Surveillance, and Privacy.
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