Industry Insiders On Real Story Behind High Gas Prices: Structural Problems, Hostile Policies, And Inaction - The Jewish Voice
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Industry Insiders On Real Story Behind High Gas Prices: Structural Problems, Hostile Policies, And Inaction

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Authored by Allen Zhong via The Epoch Times (emphasis ours),

High gas prices in America are caused by a mismatch between U.S. oil production and refining, bad policies or political hostility, and the Biden administration’s inaction, according to experts and oil industry insiders.

Inflation in the United States has been running high since March when the yearly Consumer Price Index (CPI) reached 8.5 percent, the highest level since 1981.

A dramatic increase in energy prices has drawn special attention.

Between May and August, energy prices rose between 20 percent to 40 percent year-over-year.

President Joe Biden and the Democrats have proposed different solutions to the high energy prices, including a windfall tax for oil companies, urging gas stations to cut prices, imposing an oil export ban, and allowing countries to buy Russian oil with a price cap.

However, oil industry insiders and experts said most of those proposed measures either will not work or won’t lower the gas prices in America permanently.

Michael Wirth, chairman and CEO of U.S. oil giant Chevron, rejected the idea of taxing oil companies’ profits.

Windfall profits taxes have been tried before in this country. They didn’t achieve the goal that was desired. It is pretty basic that if you want more of something, you tend not to tax it. If you want less of something, you put taxes on it,” he said during an interview with CNN on Sept. 13.

Oil Export Ban Could Be Disastrous

As inflation soared, Democrats have been calling for the White House to impose an oil export ban. But experts and a refinery owner warned this will not cut gas prices and may bring disastrous results.

U.S. crude oil exports have been increasing since 2011, and decreasing oil imports during the same time period caused net crude oil imports to decrease.

However, most of the oil in the recent export surge is light sweet oil which is also known as “shale oil.” However, the refineries in the United States were designed to refine heavy crude oil, aka conventional oil, Senior Vice President of American Energy Alliance Dan Kish told The Epoch Times.

According to an analysis by the Dallas Federal Reserve, the United States exported on average 3 million barrels of mainly light sweet crude oil per day at the end of November 2021 and imported more than 6 million barrels of mostly heavier crude oils from Canada and other foreign suppliers each day.

The U.S. refiners don’t have the capacity to process the exported crude oil, the authors of the analysis said.

Even if the U.S. bans oil exports, which are mostly shale oil, it’s impossible for refineries to update their facilities to refine shale oil after decades of political hostility against the oil industry.

Updating the facilities means the refineries need to invest billions of dollars and get extra emission-related permits.

It’s an impossible task under the Biden administration, Kish said.

They’ve made the fossil fuel business in North America the enemy of the people, that’s why the prices keep trending up,” he said.

John Catsimatidis, chairman and CEO of the Red Apple Group, at his office in New York City on Sept. 27, 2022. (Adhiraj Chakrabarti for The Epoch Times)

John Catsimatidis, a billionaire who is also an oil refinery owner, holds a similar view.

Why should anybody spend a billion, two billion, three billion, if you’re not sure of the policy of the country you’re doing business in the next five, ten years? Because you have to get a return on investment. So it’s the way the United States succeeds, the way companies succeed, if you have confidence in Washington, if they have confidence in the administration that if they spend a billion dollars or two billion dollars, that there’s going to be return of investment,” he told The Epoch Times.

Kish warned that an oil export ban will have disastrous results.

“If there’s a ban on exports, what would happen is we would end up with endless amounts of oil in the Gulf Coast. The oil couldn’t efficiently be used by our refineries. In order to make those refineries take that kind of oil, we would have to invest huge amounts of money which would drive up the price of the gasoline and the diesel on the jet fuel,” he said.

The two biggest oil companies in the United States, Exxon Mobil and Chevron, already voiced objections to the proposed oil export ban.

The risk in an action like that has unintended consequences. And, in fact, the U.S. is both an exporter and importer of products. An export ban runs the risk of taking supplies that are needed in other parts of [the] world and reducing those, which can drive oil prices up, which then can affect the price of imports into this country,” Wirth responded to a call for banning oil exports from Energy Secretary Jennifer Granholm and congressional Democrats.

Exxon CEO Darren Woods also rejected the call for an oil export ban in a letter to the Energy Department citing the same reasons, reported The Wall Street Journal.

The only ones who would temporarily benefit from an oil export ban are those refiners who specialize in refining light sweet crude oil, according to the Dallas Federal Reserve.

However, “as the price of domestically produced crude oil declines and storage fills, it would not be long before some domestic oil producers become unprofitable and cease operations,” reads the analysis.

Biden Suspended Critical Infrastructure

On his first day in the White House, President Joe Biden signed an executive order to revoke President Donald Trump’s permit for the Keystone XL Pipeline.

It turned out to be one of the most fatal moves for U.S. energy security and gas price stability because Canada is one of the most important sources of the conventional crude oil that most U.S. refineries can handle and the Keystone XL pipeline is what is needed to transport the Canadian crude oil.

“Keystone XL pipeline was going to supply about 800,000 barrels a day of Canadian oil and about 100,000 barrels a day of North Dakota oil, which is the right oil [heavy oil],” Kish said.

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