President Bidens Actions to Address Rising Gas Prices and Reduce Dependence on Foreign Oil

President Biden's Actions to Address Rising Gas Prices and Reduce Dependence on Foreign Oil

Funny how often the focus shifts from Biden's credit for falling gas prices to now wanting immediate action on rising gas prices. Recent events such as hurricanes and flooding, which are compounded by climate emergencies, highlight the complex interplay between natural disasters and international markets, but the price of eggs in the grocery store seems to be what's truly on everyone's mind.

Biden's Impact on Gas Prices

On his first day as President, Biden cancelled the Keystone Pipeline, which some argue has contributed to rising gas prices. Critics claim that these pipelines, which had been rusting for years and never actually came into use, are blamed for the price hikes. However, this timing and the subsequent price increases are often misattributed without considering the broader economic and global market factors at play.

The Current Oil Market and Its Impact

America currently produces more oil than any other country in history, yet this hasn't resulted in relief for consumers. Instead, it has led to record profits for oil giants. The phrase "drill baby drill," once seen as a solution to all economic woes, is now widely discredited. The primary determinant of the price of gas is the international global market price of oil, not the source of the oil.

Factors Influencing Gas Prices

The price at the pump includes transportation costs, state and federal taxes, and a retail markup. To understand the complexity of the situation, it's important to consider several key factors:

Global Market Prices: The price of oil is set by Big Oil and remains largely unaffected by national policies. Both domestic and imported oil follow the same global market price, regardless of grade. Grade of Oil: US refineries are optimized to process grade "A" oil, and it is increasingly difficult to refine grade "B" oil economically. As a result, domestic grade "B" oil is often exported, while grade "A" oil is imported to meet domestic demand. Domestic vs. Foreign Production: Despite producing more oil than any country in the world, the US still imports a significant portion of its crude oil. This is because US refineries can only process grade "A" oil, and importing grade "A" oil is more feasible than retrofitting refineries to process grade "B" oil. The vast majority of the imported oil comes from countries like Canada, Mexico, Colombia, and other South American nations, rather than the Middle East. Consumption and Production: The US consumes more crude oil than it produces, with a capacity gap of almost 30%. In the short term, to meet consumer demand for gasoline and other petroleum products, Big Oil must import crude oil grade "A."

Conclusion

While President Biden's decisions have had an impact on the US's oil industry, the complex global market for oil and the unique challenges faced by US refineries mean that reducing gas prices and breaking dependence on foreign oil are multifaceted challenges. Understanding these factors can provide a clearer picture of the current situation and the actions that need to be taken to address rising gas prices and improve the energy landscape.