June 25, 2022

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Is $6 a Gallon Gasoline Next?

2 min read

A car pulls up to a Chevron gas pump next to the stations price display in Alameda, Calif., June 10.


john g mabanglo/Shutterstock

What do you know? President Biden has suddenly discovered that a refinery shortage is driving up fuel prices. Naturally, he’s blaming refiners, even as his Administration doubles down on the policies that created the shortage.

In a remarkable and threatening letter to oil and gas CEOs this week, Mr. Biden seems stunned to learn that prices rise when supply doesn’t meet demand. He’s aghast that gas prices are still rising above $5 a gallon even as oil prices have stabilized at $120 a barrel. Ergo, he says, the problem must be greedy oil companies making too much money.

At least he’s finally noticed the dearth of refining capacity to process crude, which some of us have warned about for years. The U.S. has lost about one million barrels a day of refining capacity in the pandemic. Some new refineries have opened in Asia, but the International Energy Agency recently reported that global capacity last year fell by 730,000 barrels a day.

A major culprit is U.S. government policy. Some older refineries have closed because companies couldn’t justify spending on upgrades as government forces a shift from fossil fuels. They also have to account for the Environmental Protection Agency’s tighter permitting requirements—the agency recently challenged a permit for an Indiana refinery—and steeper biofuel mandates.

The EPA recently published its final…

2022-06-15 19:24:00

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