Quote:
Originally Posted by Chico23231
“Keep pinning on Biden”…lololololol…
Biden economy policies with Democratic legislation have lead directly to this country inflationary environment. Such as Biden energy policies have lead to greater gas prices and the much higher cost this past winter to heat homes. Inflation signs started last March, way before any wars…remember it’s transitory? Much like the gas prices rose way before Ukraine.
Another reminder folks, Democrats have both houses congress and the Whitehouse. Also Bernie Sanders is budget committee chairman.
|
chico you're an idiot.
https://www.yahoo.com/video/4-reason...090000545.html
1. A pandemic-induced supply and demand mismatch
One of the key culprits in the rise in U.S. gas prices over the past few years is the now familiar pandemic-driven mismatch of supply and demand.
At the start of the COVID-19 outbreak, demand for oil and gas plummeted as millions around the world lost their jobs and were unable to travel.
Diminished demand caused oil companies to curtail their production, but then, when vaccines allowed the economy to reopen, demand rebounded faster than expected, albeit not all the way to pre-panemic levels.
Suppliers weren’t ready for the new normal, which created a supply-demand mismatch leading gasoline prices to rise.
“A lot of the imbalances in the market were started because of the abrupt shift in consumer behavior during the pandemic,” De Haan said. “In 2021, oil companies started to increase production again, but given a lot of the supply-chain kinks that developed and the fact that they had laid off thousands of workers, they weren’t in a position to instantly turn that capacity back on.”
From January to May of 2021, gas prices soared 70 cents to top $3 per gallon nationwide, and that was all before the global energy market was hit with another unexpected hardship—Russia’s invasion of Ukraine.
2. The war in Ukraine and a European energy crisis
In 2021, Russia was the world’s third-largest oil producer and the second-largest producer of natural gas, according to the International Energy Agency.
Even though the U.S. imported only a tiny fraction of its energy needs from Russia last year, the interconnected nature of the global energy market led U.S. gas prices to surge after the Ukraine war began and Russian supplies were affected—and sanctions only made things worse.
At first, the U.S. and EU were reluctant to ban Russian energy imports, but on March 8, President Biden signed an executive order banning the import of Russian oil, liquefied natural gas, and coal. And on May 30, EU officials said they would cut 90% of Russian oil imports by the end of the year.
For the U.S., cutting off Russian energy wasn’t a major issue, but the EU’s aggressive pursuit of a green energy strategy that involves a transition away from coal, nuclear, and natural gas by 2050 has made it increasingly reliant on Russian natural gas.
This lack of alternatives to Russia led Europe into an energy crisis like never before after the war, and the effects were global.
Jay Hatfield, chief investment officer of Infrastructure Capital Management, told Fortune that the high cost of natural gas in particular caused many power plants in Europe to switch fuels. This meant that U.S. oil producers could get better margins by shipping their products to Europe instead of selling them domestically.
As a result, nearly three-fourths of all the U.S.’s liquefied natural gas was sent to Europe in the first four months of 2022, driving U.S. gas prices higher. So while Biden is blamed by many for the current sky-high prices at the pump, Europe’s energy crisis may be the key factor driving price increases.
“Biden didn’t help the problem, but he didn’t create it either,” Hatfield said. “I think the primary blame lies with the Europeans because they were way ahead of us in pursuing what I think is a failed strategy, which is to think that you’re going to immediately and rapidly transition to wind and solar. That’s just not physically possible.”
Hatfield argued that if Biden had followed a similar policy of rapidly phasing out natural gas and other energy alternatives, gas prices would be far worse.
3. Challenges increasing production
Another factor affecting gas prices over the past year has been challenges in increasing production.
Energy Secretary Jennifer Granholm told CNN last week that she had expected oil and gas companies to increase their output more than they have amid record prices.
“We want them to increase production so that people are not hurting,” she said. “It is extremely frustrating to see that there’s not a full-on return to production at the moment of crisis.”
But economists at the Federal Reserve Bank of Dallas argued in May that production increases won’t solve the problem of high gasoline prices in the near term.
“Even under the most optimistic view, U.S. production increases would likely add only a few hundred thousand barrels per day above current forecasts,” they wrote. “This amounts to a proverbial drop in the bucket in the 100-million-barrel-per-day global oil market.”
Oil and gas companies are also reluctant to make longer-term investments to increase production amid an ongoing clean energy transition, and a lack of infrastructure is becoming a problem in the industry, experts say.
4. Price gouging?
Biden has also blamed “price gouging” for some of the recent increase in gas prices, arguing that oil and gas companies shouldn’t “pad their profits” at the expense of Americans in a March tweet.
The president pointed to record profit margins from oil and gas companies that are driving gas price increases, and he may have a point.
Refining margins represent around $1 of the current run-up in gasoline prices, according to Hatfield. The problem is that oil companies, unlike retailers, don’t get to set the price for their product.
“Oil companies are price takers, they’re not price setters,” De Haan said. “They don’t get to decide prices, they sell at the prevailing market price, which is born out of supply and demand.”
De Haan made the comparison to the housing market, asking the question: “Am I price gouging if I sell my house at the prevailing market price?”
Still, oil companies could use their excess profits to expand their production, and they aren’t. Instead Exxon, Chevron, BP, and Shell spent more than $44 billion on stock buybacks and dividends in 2021.