Most good deceptions have a grain of truth. Presidents and politicians who have felt the political heat of high gas prices are often quick to say they have no control over prices at the pump. The reality is more complicated, as many factors contribute to the price of gasoline. But many of the most critical factors are absolutely within the control of our leaders in Washington, and there are a number of things they can do to ease the upward pressure.
The Energy, Climate and Environment Information Center
Article series: What you need to know about gasoline prices
This is #5 in a series of five articles exploring many aspects of gasoline prices – from what goes into the price of a gallon of gasoline to recommendations for policy makers to bring prices down. Click HERE or see the bottom of this article to see other articles in this series.
No policymaker can control the market price of gasoline (and other petroleum-based transportation fuels like diesel and jet fuel) or completely insulate US consumers from changes in world markets. The price of crude oil (the main driver of gas prices) is a complex and ever-changing communication between supply and various customer demands.
Labor costs, weather, refining, distribution, market expectations for the future and a wide range of other factors are all factored into a barrel of oil and filtered into the price. that a driver pays at the gas pump.
However, policy choices can make all of these factors either longer, riskier and ultimately more expensive, or they can reduce barriers to energy, influence prices for the better and build the capacity of energy producers and their customers to react to inevitable changes. , innovation and energy market disruptions.
A political agenda that enables energy abundance and efficient markets has profoundly positive impacts for Americans. Modeling by The Heritage Foundation shows that, compared to Washington’s current agenda to reduce access to conventional energy (including oil), the pursuit of a policy of energy abundance and the adoption and release of energy would give the following results until 2040:
- increase overall GDP (the value of all goods and services produced annually in the United States) by $3.4 trillion,
- increase the overall GDP produced per family of four by $39,000, and
- reduce gasoline prices by $0.20 per gallon in the short term and $0.60 per gallon in the long term.
This is not surprising since oil provides 90% of Americans’ transportation needs and is a major enabler of Americans’ productivity, mobility, well-being, and opportunity.
Other benefits of an energy abundance program include what Americans don’t notice: gasoline prices that would be worse without an increase in supply. Petroleum resources are abundant in the United States, and U.S. crude oil production has more than doubled since 2008 thanks to innovations in hydraulic fracturing technology (a drilling technique that uses pressurized fluids to fracture bedrock to extract underground oil and gas).
This increase in global supply mitigates the impact of market disruptions. For example, American drivers barely noticed a drop in prices when Iran attacked the world’s largest crude oil processing facility in Saudi Arabia in 2019.
Unfortunately, the actions of the Biden administration have only continued to raise barriers to long-term conventional American energy with a sweeping political agenda to force a costly transition away from oil and other conventional energy resources. It is a program for high gas prices.
A policy agenda to help lower gasoline prices would increase Americans’ access to America’s energy abundance in the long run. More specifically, it would be:
1. End the regulatory war against oil producers and consumers. The cancellation of the Keystone XL pipeline and oil drilling leases on federal lands are just the most visible examples of the current administration’s radical energy policy. The administration’s government-wide regulatory agenda aims to phase out oil production and use. It does this with everything from discouraging private sector investment in conventional energy companies with left-leaning environmental, social and governance – or ESG – mandates, to empowering consumers to choose the kind of vehicles they want. they can buy. the future with tough regulations.
2. Send a clear political message that US policy will not pick winners and losers on energy. Policymakers should reject the false choice posed by the Biden administration – renewable energy or conventional energy – and make it clear that the United States is open to energy companies of all kinds – enabling competition, innovation, lower prices and a more reliable supply.
3. Allow for increased energy production on federal lands and waters. The administration should immediately restore legally required oil lease sales on federal lands. Congress should make sweeping reforms to streamline federal leasing and regulatory processes rather than negotiate with bureaucrats to uphold the law. Congress should also delegate power to the states and let them override their regulatory processes for power generation on federal lands within their borders.
4. Remove barriers to energy production on private and state lands where the bulk of US energy production occurs. The administration must remove unnecessary new regulations on methane emissions from oil production and distribution, stop using the “social cost of carbon” calculation as a shadow carbon tax in its regulations and clearance, and end the threat to militarize federal air quality standards. to prevent the generation of new energy. Congress must also reverse wasteful government spending and tax favors it gives favored green energy companies that could not survive in the marketplace on their own.
5. Relieve bottlenecks in energy distribution that bad policies have created. Congress must eliminate or radically reform policies that unnecessarily contribute to higher production costs and supply chain inefficiencies. These include the failure of the Renewable Fuels Standard, the Jones Act and the permitting regimes under the National Environmental Policy Act and the Clean Water Act.
6. Allow Americans to invest in energy projects they believe will bring them good returns without fear of political reprisals. Energy companies of all kinds should find the United States a welcoming place to do business, free from cronyism and government patronage. Protecting Americans’ ability to freely engage in energy markets requires Congress to eliminate investment tax credits for certain types of energy favored by the government.
The administration must also remove regulations that discriminate against conventional energy companies and prevent them from obtaining business loans, eliminate regulations that micromanage federal pension investment plans to prioritize climate factors over financial benefits for employees, and remove regulations that mandate disclosure of “climate risk” by SOEs.
7. Protect consumers’ ability to choose their energy sources. Government should neither force consumers to use politically preferred energy sources nor prevent energy companies from having to compete for Americans’ business. The administration should rescind executive orders directing the federal government to purchase electric vehicles and eliminate regulations aimed at phasing out conventional cars and trucks. Congress must also eliminate special tax benefits for electric vehicles.
8. Strengthen partnerships with allies and trading partners. Americans benefit from a strong and diverse network of energy trading partners committed to freedom. Increasing global energy production is one of the best ways to dilute the power of adversaries who seek to militarize energy markets for political leverage.
Congress and the administration should reaffirm the mutually beneficial trading relationship with Canada by immediately approving permits for the Keystone XL pipeline and removing regulatory hurdles for similar energy infrastructure projects. The United States should also extend its regulatory, legal, and technical expertise to its partners (particularly in Europe) to help them successfully adopt proven energy technologies such as nuclear power and hydraulic fracturing.
9. Revise existing policies that block energy access. States also play an important role in promoting a political agenda for energy abundance. State policies aimed at banning fracking, limiting the construction of new gas stations, banning or phasing out the sale of gasoline and diesel vehicles, giving tax advantages to electric vehicles, and arbitrarily blocking the Infrastructure pipelines are not just misguided attempts to protect the environment, but actively work against access to resources that meet the energy needs of most Americans.
Ultimately, U.S. policymakers are not without tools to relieve pressure on gasoline prices today. The solution to high gas prices is increased supply and innovation. Americans should be free to invest, explore, produce, build, and operate the necessary infrastructure and use the types of energy that meet their needs. Such a political program would strengthen the United States and protect American consumers, whatever the future.
Do you have an opinion on this article ? To ring, please email [email protected], and we’ll consider posting your edited remarks in our regular “We hear you” column. Don’t forget to include the URL or title of the article as well as your name and city and/or state.