Gaslighting America on Gas
One More Campaign Falsehood in the Mix
There’s the stolen election falsehood, there’s the radical liberal agenda falsehood (talk about an oxymoron) and now there’s the Biden energy policy falsehood, blaming his executive orders for the high cost of gas at the pump. Sky high gas prices (compared to what Americans are used to) are fertile ground for electoral gaslighting, and given that the GOP has no policy ideas to improve the lives of average Americans, they are left with phony claims of electoral fraud, of a CRT plague in the schools, and of course inflation in general and gas prices in particular.
As frustrating as it can be to bring facts to this poo fling exercise, I’m going to give it a go.
The basic claim is that the president’s executive orders pausing new oil leases on public lands and revoking of permits for the Keystone XL (Export Limited) pipeline are causing high gas prices in the U.S. Let’s take a go at the pipeline first. The Keystone pipeline was completed in 2010, the Keystone XL was an additional branch crossing U.S. public and private lands, rivers, and Indian Reservations in order to bring heavy bituminous crude to shipping ports where it could be exported to foreign refiners.
At peak production the Keystone XL might have brought 800,000 additional barrels of oil to the global market. This sounds like a lot of oil until you look at the size of that global market, which is north of 100 million barrels a day. To examine the possible effects of that scale of delivery; we have been tapping the National Oil Reserve to put an additional 1 million barrels a day on the market…noticed any significant price reductions?
The fact is that your gas is expensive because the global price of crude oil is expensive, and fiddling additions or subtractions of a million or so barrels a day just don’t affect the global price much. If they did then the Emergency Reserve pumping would have prices heading down, not up.
The global oil market does merit examination if gas prices interest you. 50,000,000 or so barrels a day are “bought” on the crude futures markets by “investors” who have no use for oil, who only participate in this market in order to turn around and sell the delivery contracts they buy to actual users like refineries. They don’t do this out of the goodness of their hearts. They do it for money, for profits.
You’ll note, when news stories discuss the current high prices for crude they mention the Ukraine war and concerns for imminent shortfalls in supplies. CONCERNS. Concerns are not actual shortfalls, and they are like cocaine to the non-user players in the futures markets. The players want to be holding delivery contracts when actual shortfalls happen, when a “seller’s market” empowers them to jack their price as high as “the market will bear”.
When the players see predicted shortfalls coming, many go all in to pursue futures contracts, creating a bidding war for those contracts. This is where some sketchy market actions enter. The price of futures contracts is public knowledge and becomes the base for most if not all oil sales. When our local producer of crude sells that oil to our local refineries to become our gas at the local pump, they charge the “global” price, regardless of whether anything has changed in their cost of production or delivery.
There’s literally nothing that government, federal or state, can do about this. It’s a private market, they can set prices however they want.
Moving on to the next gaslight; Republicans would have you believe that if only more federal drilling leases were offered, the supply would rise and prices would fall. Possibly some of them actually believe this. A look at the numbers shows the real situation. Oil produced from federal lands accounts for about 7% of U.S. production, which works out to less than 1% of the global market. Possibly issuing more leases would eventually boost that number 10–20%, or maybe 15/1000 of global supply.
To put that in numbers, it’s about fifteen cents a barrel, and there are 42 gallons in a barrel. In other words, 1/3 of a penny per gallon.
Now, if our legislators decided to pass laws that earmarked U.S. produced oil for U.S. markets maybe the price making would change. On the other hand the U.S. has only recently begun to produce enough oil to supply the national needs, and there is no guarantee that we can do so forever, or even for a long time.
The effect that high oil prices have on the cost of goods in the marketplace is truly global, both in location and in scope. Oil produces the plastics, the fertilizers, the pesticides, the lubricants, the building blocks of manufactured products. Oil moves the cargo ships, the trains, the trucks that deliver the building blocks to the producers and the products to market. Oil delivers the workers to the factories, offices, and fields, the kids to the schools so that the workers can work, the consumers to the restaurants, national parks, bluegrass festivals, ball games, the hot dogs and beer barrels to the stadiums where they gather.
It’s fun, and obviously profitable politics to blame the people holding office for the things that the vast global economy hath wrought. It’s not honest, but honesty seems to be a product about five years past its “sell by date”.