Gasoline prices had fallen for 100 days until the last week in September when refinery issues resulted in supply problems. A refinery in Ohio that produces 160,000 bbl closed because of a fire that killed two workers, and that closure came on the heels of a fire at a refinery in Indiana producing 440,000 bbl.
There have also been scheduled — and unscheduled — refinery closures on the West Coast. Taken together with the recently announced cut in production of 2 million bbl by OPEC+, the critical shortages in supply would be a problem regardless of who the president was.
The OPEC cut will hit the U.S. especially hard. Analysts believe it will add between 15 and 30 cents a gallon to the price of gas at the pump. Meanwhile, oil prices are headed to $100 bbl and will stay there indefinitely. And there are more price increases coming after the election when the EU begins its boycott of Russian oil, adding to the shortages.
Biden is not going to be able to brag about falling gas prices before the election.
The price of oil, the primary input for gasoline, is also having an impact. Brent, the global benchmark, rose more than 2% to $93.90 on Wednesday. Exports of U.S. crude oil, OPEC+’s production cuts and limited capacity for additional releases from the Strategic Petroleum Reserve have essentially backstopped global oil prices from falling below $80 per barrel, putting a floor on domestic gasoline prices, said Frederick Lawrence, a director at research firm Capital Alpha Partners. “You don’t see these stresses fading away tomorrow,” he said.
The shuttered refineries couldn’t have come at a worse time. Demand has been increasing despite the seasonal cut in refinery capacity.
The downtime has further reduced an already shrinking production capacity. Since 2020, about 3 million barrels a day of global refining capacity has been shut permanently, including about 1 million in the U.S., according to the EIA. Gasoline inventories in the U.S. last week were down about 8% from a year earlier, at their lowest level since 2014.
Demand for the fuel has also increased slightly recently, putting additional strain on the tight supply, analysts said. Drivers consumed 8.77 million barrels of oil a day last week, about 2% more than the previous week, according to the EIA.
What can’t be quantified is how much more oil would be available if Joe Biden hadn’t gone to war with the oil companies by halting pipelines, promulgating suicidal regulations, and pushing climate change action ahead of energy production. That loss will never be known.
But Americans are paying for Biden’s stupidity now.
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