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Fossil fuel economics 101

by Ron Holdraker
April 30, 2022

You have to love posts on social media, such as President Biden is responsible for the high prices at the pump!

Now, that you all have either heard, or believe the gas gags, we will review some actual high gas prices/gas facts.

First, I do not like many Biden policies, but am tired of Republican Party rhetoric in attracting really dumb voters.

If all the top gas producers have thousands of untapped oil leases in the U.S., why do we still rely on foreign oil. Isn’t the U.S. one, if not the largest oil lands in the world?

• Gas lease drilling is traditionally more expensive than buying cheap oil on the worldwide market. When a, oil shortage, due to import problems such as a pandemic hits, wars or tensions in foreign markets occur, this causes stock market jitters and price increases. Also, when an oil plant(s) goes down due to weather, or accidental human problems, again stock market jitters cause increases. It would take months to years for any new wells in the U.S. to have any impact of prices at the pump.

If United Refining promotes being an ‘All-American’ gas producer, why have their gas prices risen to national levels in times of alleged shortages at their gas stations?

• United Refining in Pennsylvania follows other energy companies in setting regional gas prices. The answer is that the crude oil we buy is sold to us at an internationally traded commodity price that is set globally. Where (or when) that oil came out of the ground has no bearing on the price per barrel. But one must question why all gas producers are making record high profits due to mythical shortages in the U.S.

If only Biden and Democrats allowed the pipeline from Canada, we would not be paying more at the pump!

• On June 9, 2021, the Keystone XL project was abandoned by its developer. At the time of the project’s cancellation, approximately 8% of the pipeline had been constructed. It would take years and billions to restart the project. It was also determined that, with the addition of new technologies (fracking), the pipeline was obsolete as the U.S. became one of the chief oil producers in the world. The pipeline was also deemed to be an environmental hazard and the need for approval to traverse private parties with eminent domain became an issue. It was also determined any oil from the pipeline would more likely end up in foreign countries. Experts  have stated even if the pipeline was already built, it wouldn’t help with the price at the pump, noting that the U.S. has already doubled its oil production over the last 15 years. “And yet, we still have $100 per barrel oil.”

If the pipeline through America from Canada was so crucial, why are Americans using it as a anti-Biden slogan?

In short, people don’t care what causes the interruption in supply chains on gas, or other products, they immediately turn to the government for solutions. 

There, I have explained/defined the crucial talking points created by social media, but it really will make no difference. Political parties know this and over-use it to garner frustrated votes. ‘Why’ really doesn’t matter when convenience and people’s pocketbooks  are concerned. In general, people do not like change, or disruption in their lives. Government municipalities will either cut, or suspend certain gas taxes in showboat political fashion, but in reality this too will have little impact,  and only have a hardly noticeable ripple effect on the economy. Life and politics go on.

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