What is responsible for record gas prices?

Biden? The war in Ukraine? Corporate greed? The answer isn’t Biden. With the exception that he should be putting as much pressure as possible on U.S. producers to lower oil prices. According to The Wall Street Journal, only 8% of U.S. oil imports or 672,000 barrels a day comes from Russia. The U.S. produces 11.1 million barrels of crude oil each day and imports another 7.2 million barrels a day. By comparison, the United States uses approximately 18.1 million barrels of oil daily. The most significant reason gas prices are higher is that U.S. oil companies are producing over a million barrels a day less than they did before the pandemic.

Oil companies have the “existing” capacity to produce more oil; this data is readily available on the U.S. Energy Information Administration’s independent website (www.eia.gov). Additionally, U.S. oil producers aren’t using most of the leases they ended up getting after attorneys general from oil-producing states blocked the Biden administration’s efforts to curtail drilling on federal lands last summer. Although oil lease usage is not a significant factor in near-term oil pricing, it can indicate that U.S. consumers might spend more at the pump in years to come. Why are oil producers blaming shortages on the Biden administration’s energy policy and the war in Ukraine?

Analysts predict U.S. oil producers will post record profits this year and the next. Since early February, Exxon Mobile stock has risen more than 20%. Chevron has gained over 25% since last month. We may feel stupid for not seeing those investment opportunities. However, most of us weren’t thinking with our wallets when Russia invaded Ukraine. The oil companies were, and most people will contribute to Exxon and Chevron’s profit streams without benefiting from the resulting rise in their stock. Meanwhile, oil companies will continue to complain about the Biden administration’s energy policy.

Oil producers have seemingly crafted an effective narrative that conveniently fits the mindset of many American consumers, and one that falsely supports claims that domestic oil shortages have nothing to do with corporate profit-making motives.

(I retired from the Air Force in 2009, moved to Lehighton in 2013 and have a master’s degree in business administration.)

Steve Chuckra

Lehighton