By Stacy M. Brown
The arrival of summer usually means family reunions, barbecues and vacations.
Unfortunately, American automobile drivers have routinely experienced higher prices at the gas pump.
A recent U.S. Energy Information Administration (EIA) report noted that gasoline prices continue to climb for winter lows, averaging $3.112 per gallon. The price is comparable with May 2019 ($2.909) and May 2018 ($3.039).
It is also well below levels this time of year from 2011 to 2014.
Like so many other of life’s necessities, high fuel prices disproportionately affect the motorists of color.
For instance, one report noted a 60-cent per gallon price difference in the cost of fuel in the heart of predominately Black North Philadelphia and the ritzier suburbs.
While advanced fuels and innovative technologies help consumers benefit from more fuel-efficient vehicles that drive farther and run cleaner, consumers still notice when prices rise at the pump.
Officials say demand continues to drive the higher cost of gasoline.
According to AAA, 60 percent more people are traveling 50 miles or more from home this year than last year during the height of the pandemic.
The EIA increased its forecast this month for summer gasoline demand by 100,000 barrels — or 4.2 million gallons — per day over its April forecast.
Supply is another reason for the higher prices.
“Our industry, along with the rest of the country, is recovering from impacts of the pandemic, which dramatically cut petroleum demand leading to slowing domestic oil production,” oil and natural gas officials wrote in a recent blog post.
“Now demand is returning, and production must keep pace,” the officials noted.
In a podcast, American Petroleum Institute Chief Economist Dean Foreman pinpointed supply and demand.
“If you think of the way it’s played out, the fact that we grew domestic oil production over the last decade really did break the stranglehold that OPEC and Russia together had previously over oil prices,” Foreman noted. “And the ability to control its own destiny there has just cushioned U.S. consumers. So, to the extent that oil prices rise, it could affect U.S. household costs for transportation for driving and flying.”
Because oil is traded globally, robust domestic production puts downward pressure on global crude costs and consumers benefit, oil and gas industry officials noted.
“Thus, we need policy approaches that safely develop domestic reserves, on and offshore, so that U.S. production once again impacts the global crude market,” one official wrote.
The industry believes that strong domestic production also is critically important to U.S. energy security. Thanks to rising domestic production, the U.S. in 2020 became a petroleum net exporter on an annual basis for the first time since 1958.
“But, because of less trade and lower domestic production compared to pre-COVID levels, the U.S. returned to being a petroleum net importer earlier this year,” the official said. “Put simply, when the U.S. is a net importer of petroleum, it is reliant on foreign suppliers and less energy secure.
“So, the question is, can’t the U.S. just produce more oil?” the official said. “Historically, it has with more development – and relatively quickly as supporting prices increased, a key benefit of the U.S. energy revolution. But with the economic impacts of the pandemic, drilling and capital investment have remained low.
“Industry-wide capital investment in the first quarter of this year was the lowest for any quarter since 2008. It’s a global phenomenon, not limited to the U.S., making sound energy policy all the more important,” the official continued. “Now, with the pandemic’s effects on the economy and domestic energy production playing out, Americans are beginning to notice the importance of planning for energy abundance and security through strong domestic production – as well as the need to ensure that we have the energy infrastructure to deliver supplies where they’re needed.”
Read the full article here.