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OPEC Lifts Production in February

Nick Cunningham

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

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Who’s To Blame For High Gasoline Prices?

As retail gasoline prices rise to $3 per gallon across the United States, gas prices are a hot political topic in Washington once again, with the Democrats hoping to slam Donald Trump for causing pain at the pump and Republicans trying to shift blame back on their opponents.

High gasoline prices have long presented dangers for politicians, particularly for those in power when prices rise. The debates often make for great political theater, although they typically fall far short on the substance.

The spike in crude oil prices in 2008, during the heat of the presidential election, popularized the “drill, baby, drill” slogan and also led to calls from both Senators John McCain and Hillary Clinton for a “gas tax holiday” – a temporary suspension in federal gas taxes.

During the Arab Spring in 2011, and the outage of oil supply in Libya, prices spiked again. Republicans blamed former President Obama for high prices, charging that his refusal to allow more drilling caused prices to rise. His release of oil from the strategic petroleum reserve also came under criticism. Years later, when prices crashed because of the oil market downturn, Obama took credit for low gasoline prices.

We haven’t heard much about gas prices since 2014, but with WTI over $70 and gasoline back to $3 per gallon, suddenly it is a hot topic again.

The Democrats held a press conference on Wednesday in front of an ExxonMobil gas station in Washington to blast the Trump administration for high gasoline prices. “It’s time for this president to stand up to OPEC,” Senate minority leader Chuck Schumer said. That was accompanied by a letter by several top Democratic Senators asking Trump to “pressure” OPEC to “increase world oil supplies in order to lower prices at the pump during the upcoming summer driving season.” They noted that the run up in gas prices could cancel out the benefits of the tax cuts from last year. Related: Iran: Trump’s Sanctions Can’t Touch Our Oil

The Democrats also blamed Trump’s foreign policy for the price increase. “There’s a straight line between Trump’s policies and the price of gasoline,” Sen. Brian Schatz told Politico.

Not to be outdone, the Republicans responded according to the typical script. Senator Lisa Murkowski said the Democrats should support more drilling. “This is pretty simple. If you don’t support access, leasing, production, pipelines, refineries, or the reasonable regulation of all of those, you’ll be left at the mercy of countries that don’t like us.”

In California, Republicans are pushing a ballot initiative to repeal a state tax on gasoline and diesel, a move they hope will turn a political weakness into a strength. But any cut in fuel taxes would drain funds for infrastructure. “Folks need to understand what the gas tax dollars are going to be used for," Carl Davis, research director at the left-leaning Institute on Taxation and Economic Policy, told E&E News, "and if the repeal happens, what projects won't happen, what roads won't be repaired, what bridges won't be repaired. You have to get specific with people about where the money's going to go or not if there's a repeal."

The position from both parties is predictable, and a flip of the script from a few years ago when a Democrat was in the White House. Despite what the Democrats say, Trump can’t simply order OPEC to increase production. “The influence of the U.S. on an OPEC meeting is basically zero,” Thomas Cape, senior analyst at Evercore ISI, told Bloomberg. However, they are right in that Trump has contributed to higher prices by scrapping the Iran nuclear deal, which helped push WTI over $70 and Brent up to $80 per barrel. Related: Are Venezuelan And Iranian Oil Exports About To Plunge?

As for the Republican comments, they are right that higher production has kept prices somewhat in check, and indeed, shale output was a major factor in the oil market meltdown that began in 2014. Yet, it is odd to demand that the Democrats should support more drilling – the Trump administration has already essentially pulled out all the stops to allow drillers unfettered access to every corner of the country. It’s way off base to argue that oil prices are going up because the Democrats are not sufficiently supportive of drilling.

In reality, the Trump administration doesn’t have much control over the situation, barring a reversal in the belligerent foreign policy towards Iran or a major sale of oil from the strategic petroleum reserve, the latter of which, in any case, would be a one-shot affair. Just about any other policy initiative – whether supporting more supply or trying to curtail demand – not only isn’t all that effective in the short run, but would have only marginal impacts on the global price of crude oil.


In that sense, far from having heavy influence over OPEC, the Trump administration will be at OPEC’s mercy when it meets in Vienna in a few weeks.

By Nick Cunningham of Oilprice.com

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  • Tom on May 24 2018 said:
    Well we all bought big pickups and SUV over the last couple of years and now we get to pay for it. Cheap gas was a nice ride while it lasted. Trump and the EPA could help by reducing restrictions on ethanol's use. Allowing year round sales of E-15 and higher ethanol blends would help as ethanol is currently lower priced than gasoline, even on an energy equivalent basis. Ethanol also has an octane rating of 113, so its great for replacing the hazardous octane boosting agents like Benzene present in our gasoline. EPA has constantly shielded the gasoline market from any real competition from ethanol, so if we really want cheaper gasoline, we need to push Scott Pruitt at the EPA, to stop blocking ethanol's use in the market place. Scott Pruitt has been busy this year granting waivers to refiners to not use cheaper priced and cleaner burning ethanol. Surprise, surprise, surprise, gasoline prices are sky high! Well see is a few days if Scott takes away the cleaner burning, higher octane, lower priced E-15 fuel choice for consumers this summer. What do you think Scott "oil man" Pruitt's gunna do?
  • Patrick Treu on May 24 2018 said:
    It's the oil companies, Not Democrats or Republicans.
  • Robert Earnest on May 25 2018 said:
    Cause? How about the fact we now export oil? Drill baby drill created more oil than America needed but rather than maintain these reserves for our use we (R's and D's together) repealed the export provisions regarding crude and refined oil. We then flooded the world market with oil driving down prices. OPEC and other producers responded by cutting their production to force oil prices back up thus screwing everybody but the oil companies.
  • Steve on May 25 2018 said:
    High gas prices? Yes, gasoline prices are up, but I still don't consider them high.

    If your car has a 20 gallon fuel tank, and gasoline increase from $2.50/gal to $3.00/gal, then you will pay an extra $10.00 per fill-up. The typical driver has to fill up roughly once a week.

    If an extra $10/week breaks you, then you have some serious financial problems that have nothing to do with the price of gas.

    Price increase is only a problem when the prices spikes suddenly and stays high for an extended period of time. This causes the U.S. economy to slow. This is not the case, this time.
  • Henry Hewitt on May 25 2018 said:
    Thanks Nick. I thought the recent rise was due to too much 'clean' oil coming from the Bakken, Permian and Eagle Ford, which means that the refineries aren't geared up to handle so much of the good stuff. Whatever the case may be, it is better to buy a single EV than to curse the oil patch. The answer to your headline is: We are.
  • Debra Caron on May 25 2018 said:
    You can blame Obama and the oil companies for the prices increasing. When oil was at $40.00 a barrel Obama allowed our oil companies to start exporting oil which we haven't done in almost 40 years. We are exporting record amounts of oil and gasoline products to other countries and that means our oil is not being places back into our supply. Every time the US shows a draw down on oil, our prices increase. In April and May the oil companies have exported record amount of oil and gas products, the highest amount exported in our history. In the Midwest our refinery output is at 99.3% but we still had a draw of gasoline -1.7, I find this hard to believe since our weather was very stormy last week, there is no way there should have been a draw down in gas.
    Think about this in 2014 oil was at $100.00 dollars a barrel but our US avg for the price of gas was $2.69, then why when oil is at $70.00 a barrel we are paying much more, the US avg today is $2.980, which is ridiculous. One of the oil companies profit for the first quarter was 59 billion dollars, so who do you think is to blame for our oil prices.
  • Tom on May 25 2018 said:
    Debra Caron, if you live in the Midwest, do you use ethanol blended fuel, E-10, E-15 E-30 or E-85 to reduce the price of your gasoline purchases? Due to all of the RFS Refinery Waivers from Scott Pruitt to the Refining Industry, ethanol is at historic low prices compared to gasoline. Ethanol has been running up to 80 cents per gallon less than gasoline in direct cost and up to 42 cents per gallon less than gasoline on an energy equivalent basis. So there is hope if you have access to ethanol blended fuels. While oil and gasoline prices have jumped up significantly, ethanol has basically stayed the same price. So check out ethanol blended fuels in your area and give yourself and your budget a brake! E-15 can be used in all light duty vehicles 2001 and newer. E-15 is A Better Fuel for A Better Price.
  • Greg on May 25 2018 said:
    All well and good Tom about Ethanol and 15% blend. However unless you have a new car it can't be used. It's also been shown like the E85 gas you can easily get at the pump is actually less efficient when it comes to real mpg. As others have said in this post the refiners are making huge profits on our backs along with this crazy allowance of exporting gas and crude. We should have more control with all the oil we can get out of the ground now.
  • kevin WEIR on July 08 2018 said:
    how come gas prices are higher now then when oil was 150 a barrel? gas then was about 2.50 a gallon.. now that prices are only 73 a barrel, why are gas prices almost double what they were back then?

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