Gas prices at 7-year high and rising as Biden wages offensive against domestic energy producers

[Rob Corper]

Thank you Joe Biden.

"Gas prices at 7-year high and rising as Biden wages offensive
against domestic energy producers"

<https://freerepublic.com/focus/f-news/4003259/posts>

"Gas prices at 7-year high and rising as Biden wages offensive
against domestic energy producers
https://justthenews.com ^ | Updated: October 12, 2021 - 11:06pm | By
Bethany Blankley
Posted on 10/13/2021, 11:02:54 AM by Red Badger

Oil and gas supply is too low to meet U.S. demand, due to a
combination of factors, including halting of new leases on federal
land, halting the Keystone Pipeline, and increasing regulatory
burdens, industry analysts argue.

"Average gas price: June 2020: $2.21 June 2021: $3.07 President
Biden's economy!" Rep. Jim Jordan (R-Ohio) tweeted during the summer.

"You forgot to mention that gas prices are the same now as they were
in June 2018," White House Press Secretary Jen Psaki fired back. "Or
that this time last year unemployment was 11.1% — today it's 5.8%.
@POTUS agrees families shouldn't pay more at the pump — that's why
he's opposed to GOP proposals to raise the gas tax."

Yet, the Democrats' $3.5 trillion budget reconciliation bill
reportedly includes an estimated $6 billion worth of charges on U.S.
oil and gas operators on federal lands, which could effectively put
mom and pop small business, and minority and Native-owned operations
out of business, in addition to killing tens of thousands of jobs.

There isn't enough oil and gas supply to meet U.S. demand, due to a
combination of factors, including the Biden administration halting
new leases on federal land, halting the Keystone Pipeline, increasing
regulatory burdens, and other measures that will take years to
correct, those in the industry argue.

In one of his first acts in office, President Joe Biden, through
executive order, halted the issuance of new oil and gas leases on
federal lands, effectively stopping much production for existing
operations. He also eliminated low-cost Canadian crude from being
processed by mid-continent and Gulf Coast and U.S. refiners by
prohibiting the Keystone pipeline from opening.

If Biden had not severely hampered domestic production, the U.S.
would have an ample supply of oil and gas and commensurately lower
costs at the pump, industry experts argue.

The $6 billion in additional costs imposed on the industry included
in the budget reconciliation bill include new methane fees,
inspection fees, severance fees, and bonding requirements, as well as
additional requirements for operating on federal lands.

One provision increases onshore oil and gas royalty rates on federal
leases from 12.5% to 20%. The increase could be unsustainable because
of the time it takes to go through a bureaucratic application and
review process in light of the costs associated with capital
investment and regulatory compliance costs. It takes years to
complete required assessments and studies associated with lease
approvals, and to invest capital and infrastructure to facilitate
drilling, production and delivery.

Another provision includes an additional $15 per-acre fee for
expressions of interest in public lands with no guarantee that the
companies applying for it would be included in eventual lease sales.
The proposal might be likened to applicants paying several months'
rent up front with a rental application not knowing if they'd get
approved, and not having the deposit refunded if the application is
rejected. The rental market would collapse, as no one would apply for
a house or apartment lease under such terms.

Another proposal shortens the length of the lease from 10 to 5 years,
making the lease nearly moot, since it often takes five years for a
lease to be approved.

In a letter to the leaders of the House Energy Committee, the heads
of Western Energy Alliance, U.S. Oil and Gas Association,
International Association of Drilling Contractors, and Energy and
Workforce & Technology, who represent hundreds of companies in the
industry, say the proposals will eliminate tens of thousands of
American jobs and decimate rural communities.

Likewise, regulatory burdens imposed on banks that effectively result
in denying capital to some in the industry is stifling oil and gas
production, Heywood Cooper, principal at Houston-based Argos
Minerals, told Just The News. "The administration is committed to
denying the energy industry access to capital, going down the same
road as the Carter administration in the 1970s, which carried over
into the '80s," he said.

The policy changes come as European and Asian demand for oil is
limiting available U.S. domestic supply, causing gas prices — and
other costs in turn — to rise.

This past week, the U.S. benchmark for crude oil, the West Texas
Index (WTI), surpassed $81 a barrel, and the international benchmark,
Brent Crude topped $84 a barrel.

The price of crude oil accounts for roughly 67% of the per-gallon gas
price, the U.S. Energy Information Administration explains, excluding
state and federal taxes.

As the WTI and Brent indexes increase, gas prices go up; as they
fall, so do gas prices.

At this time last year, oil was roughly $45 a barrel, having
increased from minus $35 a barrel in March — the lowest ever in WTI
history.

Instead of supporting U.S. domestic production to recover losses from
the bloodbath of 2020, the Biden administration called on OPEC+ to
increase crude supply — making the U.S. even more dependent on
foreign oil.

In a financial note to investors, Marko Kolanovic, chief global
market strategist for JP Morgan, offered reassurance that "even with
oil at $130 or $150, equity markets and the economy could function
well (with some rebalancing and capital rotations)," The Street
reported.

"All of the major asset classes (bonds, stocks, real estate, etc.)
have increased about 50% or more, while oil has declined 25% over the
last decade," Kolanovic added. "Oil is by all cross-asset comparisons
cheap today."

The WTI has never reached $130 or $150 a barrel in U.S. history.

By way of comparison, the current price of $4.44 a gallon in
California at $80 a barrel would be over $8 a gallon at $150 a
barrel. In Texas, it would be $5.45, according to Kolanovic's
forecast.

While these prices seem astronomical to most Americans, "Americans
don't understand how good we've had it," Cooper adds. "People in
Africa, Asia and Europe already pay far more for gasoline than we do
by the liter. At $3 a liter, people living in poorer countries in
Africa are paying more than $12 a gallon by comparison."