Skip to main content

Energy Tomorrow Blog

Price Inflation Could Imperil the Economic Recovery

consumers  prices  energy costs 

Dean Foreman

Dean Foreman
Posted September 1, 2021

One of the great stories of the U.S. energy revolution is that, as it broke productivity records, it ultimately imposed downward pressure on the prices for energy and other goods and services, benefiting U.S. household budgets.

 

Yet, so far in 2021, prices have risen for energy and most other goods – and could bring unfavorable surprises for macroeconomic policies and households alike.

 

More »

We Need More U.S. Oil, Not an Import-More-Oil Strategy

president  opec  crude oil production  gasoline prices  consumers 

Mark Green

Mark Green
Posted August 11, 2021

The White House has big problems with its continued calls for more crude oil production from OPEC – even as it is discouraging U.S. production.

Rising domestic gasoline prices are a political problem for President Biden. … The administration’s political dilemma is that since April 2020, when EIA reported the per-gallon cost of gasoline was $1.938, prices rose to $3.231 last month. The safe assumption is that most Americans have noticed the 66.7% increase at the pump.

The White House response last month was to plead with OPEC to produce more crude oil – and that’s because the cost of crude oil is the No. 1 factor in the retail cost of gasoline. More supply means more downward pressure on crude costs and retail prices.

On Wednesday, President Biden doubled down on the approach, saying the administration wants OPEC to reverse production cuts made during the pandemic to lower prices for consumers. … Therein lies a big energy policy problem.

More »

Q&A: The Demand/Supply Dilemma, Consumer Impacts and the Need for Sound Policy

demand  supply  us energy security  production  consumers  gasoline prices 

Mark Green

Mark Green
Posted July 1, 2021

In recent weeks API Chief Economist Dean Foreman has noted the return of petroleum demand, as economies strengthen in the U.S. and globally, to a level that’s outpacing supply (see here). In the Q&A that follows, Dr. Foreman discusses the impacts of the supply-demand mismatch on American consumers and markets, as well as the consequences of the Biden administration’s energy policy signals.

More »

Summer Driving Season – Questions and Answers

gasoline prices  us energy security  oil production  consumers 

Mark Green

Mark Green
Posted May 27, 2021

As Americans flock to the roads this Memorial Day weekend, let’s consider the key factors that impact fuel costs, what it means for U.S. consumers and the best paths to ensure affordable, reliable energy going forward. Four questions and answers: Where are fuel prices today, what's driving fuel prices higher, what can be done to help U.S. consumers, and is the U.S. on the right energy policy course?

More »

Don’t Bet Against U.S. Natural Gas and Oil

crude markets  us energy security  oil prices 

Mark Green

Mark Green
Posted March 17, 2020

Much of the news surrounding the U.S. natural gas and oil industry is fairly challenging right now: some of the lowest global crude oil prices in years; world energy demand, which already was slowing, has been further affected by the coronavirus; Russia and Saudi Arabia, the world’s No. 2 and No. 3 oil producers, plan to increase output, launching a price war that also might be aimed at clawing back market share lost to U.S. shale producers in recent years.

Even so, don’t bet against the U.S. natural gas and oil industry. Ours is an industry of innovation and technological expertise that historically has risen to overcome serious circumstances, playing a key role in building U.S. economic strength and increasing the nation’s global security.


More »

U.S. Supply, Global Efforts Cushion Global Oil Markets After Weekend Attack

Oil reserves  saudi arabia  energy prices  fuel supply 

Dean Foreman

Dean Foreman
Posted September 16, 2019

An attack on a Saudi Arabian oil processing facility over the weekend has knocked out a significant part of Saudi production, at least temporarily, shaking oil markets. The precise amount and duration of the outage remains uncertain, and there are still unknowns about the attack that caused it, which in turn has inflated the risk premium on oil prices due to market fears about what may happen next within the region. 

The market’s initial direction is clear, with Brent crude oil up more than $8 per barrel as of 3 p.m. Monday, per Bloomberg. Let’s break down what’s happened in context, recognizing that the U.S. energy revolution has fundamentally added to U.S. and global near-term deliverability of oil, natural gas and natural gas liquids, generally helping stabilize the global market against supply disruptions. 

More »

GAO Report – Another Reason to Sunset the RFS

ethanol  renewable fuel standard  consumers  gasoline prices  emission reductions 

Jessica  Lutz

Jessica Lutz
Posted June 11, 2019

We’ve warned before (see here, here and here) that the broken Renewable Fuel Standard (RFS) and its mandates for ever-increasing ethanol use put consumers at risk. And that the administration’s recent decision to allow summer sales of E15 fuel – a blend containing 50 percent more ethanol than the E10 gasoline that’s widespread across the country – is an ineffective approach to addressing concerns with the RFS that will only serve to make things worse. Now, we can add another report to the long list of evidence that the RFS needs to be sunset – this time coming from the non-partisan U.S. Government Accountability Office (GAO).

The GAO recently reviewed the effects of the RFS and found that requiring the use of corn-based ethanol and biodiesel in gasoline supplies hasn’t lowered pump prices or significantly reduced greenhouse gas emissions – two of the main goals of the flawed RFS program. In fact, the review finds that gas prices outside of the corn-rich Midwest likely increased because of the program. To make matters worse, the review also found that there has been little, if any, reduction in greenhouse gas emissions – a main selling point used by proponents to justify the program. 

More »

Summer Driving and Gasoline Prices

consumers  gasoline prices  fuels  gasoline taxes 

Dean Foreman

Dean Foreman
Posted May 1, 2019

With summer driving season almost here, nationwide average gasoline prices were $2.88 per gallon as of April 30, according to the American Automobile Association, identical to what they were one year ago when adjusted for price inflation. This good news for consumers is due, at least in part, to record-breaking domestic oil production, which has put downward pressure on global prices for crude oil, the main factor in determining prices as the fuel pump.

While the current price may be the same when you pull up to pump, some notable things have changed behind the scenes.


More »

Series: Plentiful LNG Enhances U.S. Global Leadership

liquefied natural gas  lng exports  trade  us energy security  prices 

Dean Foreman

Dean Foreman
Posted March 25, 2019

For U.S. natural gas, the fourth quarter of 2018 ended with consumers benefiting from the lowest prices in nearly a year – despite the weakest inventories and coldest winter since 2014.

Indeed, recently we’ve seen natural gas prices as low as $2.56 per million Btu (Feb. 5, Bloomberg) corresponding with record high demand of 96.3 billion cubic feet per day (bcf/d) of marketed production for February 2019 and low inventories – 415 billion cubic feet below the five-year average range as of Feb. 1.

It’s remarkable, because this combination of factors ordinarily would raise natural gas prices. The fact that prices fell illustrates the vigor of domestic production, which has soared during the U.S. energy revolution.

Domestic abundance and affordability have been at the heart a truly amazing U.S. natural gas story – one that has seen U.S. producers meet domestic needs and also increase liquefied natural gas (LNG) exports to friends and allies around the world.


More »

Explaining Natural Gas Price Fluctuations

consumers  natural gas  energy costs  prices 

Dean Foreman

Dean Foreman
Posted November 21, 2018

Recent headlines on natural gas prices may leave Americans feeling whipsawed by marketplace fluctuations (see here and here). So, let’s look at what’s been going on with natural gas this year. But first, four points to keep in mind:

Affordable natural gas has saved the average household more than $100 per year in recent years; (2) most consumers are typically insulated from wholesale price variations – the focus of recent news coverage; (3) price increases this month to date are mainly the result of lower inventories coupled with cold weather forecasts that, of course, can change suddenly; and (4) recent price movements in natural gas futures are well within the ranges seen during the resurgence in U.S. energy production

More »