Higher U.S. Gasoline Prices Reflect Crude Oil Supply-Demand Imbalance
Posted August 5, 2021
This summer, Americans saw gasoline prices rise to their highest level since 2014 as Congress debated infrastructure policy and economies worldwide continued their recovery.
Gasoline prices primarily reflect the local balance between gasoline supply and demand. Notably, the cost of crude oil is the largest component in the price of regular gasoline, accounting for 55% of the per-gallon cost, according to the U.S. Energy Information Administration. Right now, demand for crude oil is outpacing supply across the U.S. See below for the complete breakdown of crude oil, refining, distribution and marketing expenses:
Globally, we have seen energy demand run ahead of supply, putting upward pressure on crude oil costs and the prices American consumers see at the pump.
Given these conditions, it’s no time to restrict or discourage U.S. natural gas and oil production. Instead, government and industry should work together to expand the safe and responsible development of American energy resources.
Unfortunately, while America’s natural gas and oil are in high demand, the Biden administration has advanced misguided policies that could exacerbate the crude imbalance and further affect consumers:
- Restricted Access – The administration’s indefinite pause on federal natural gas and oil leasing has potential consequences for our national security, economic recovery and environmental progress. “Import more oil” policies like this stand to increase America’s dependence on foreign nations, undermining our advantages as a global energy leader.
- Discriminatory Taxes – By targeting the natural gas and oil industry with burdensome taxes, policymakers are threatening U.S. energy security. As an engine for economic growth and job creation, operators should not be subject to unnecessary taxation and regulations.
- Infrastructure Obstruction – Pipelines are the safest, most environmentally friendly way to deliver natural gas and oil, and they are essential to cross-border trade between the U.S. and Canada. Blocking the development and modernization of our nation’s pipeline infrastructure can impede the delivery of much-needed transportation fuels.
We urge the Biden administration and Congress to reverse or abandon these policies without delay.
About The Author
Lem Smith is API’s vice president for Federal Relations. Lem joined API in February 2020 as vice president for Upstream Policy & Industry Operations. He previously served as a principal at Squire Patton Boggs, an international law and public-policy firm, where he advised private and public sector clients on federal and multi-state policy matters and provided counsel on communications strategies, campaign affairs and crises management. Previously, Lem was director, U.S. Government & Regulatory Affairs at Encana, and responsible for all aspects of U.S. government relations and regulatory policy matters at the state and federal levels. Prior to that, Lem was director of Government Relations for Kerr-McGee Corporation. Lem began his career on Capitol Hill, working for U.S. Senate Majority Leader Trent Lott, U.S. Rep. Roger Wicker (Mississippi) and the late U.S. Rep. Charlie Norwood (Georgia), where he negotiated key member priorities within the 2005 Energy Policy Act (EPAct). Lem is a graduate of the University of Mississippi.
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