When the Federal Reserve raises rates, it usually does so in quarter-point increments. the Fed just announced today that it will super-size the rate hike to 3/4%, The last time the central bank had super-sized the rate hike was 1994 -- just before the U.S. economy boomed for the remainder of the 1990s.
https://www.wsj.com/articles/is-6-a...ge-fossil-fuels-11654806637?mod=hp_opin_pos_1 Is $6 a Gallon Gasoline Next? The assault on fossil fuels has shrunk U.S. refining capacity. By The Editorial Board June 15, 2022 7:24 pm ET 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 renewable fuel standards for this year, which the American Fuel and Petrochemical Manufacturers called “unachievable.” They usually are. One problem this year is that gasoline consumption has been trending lower from last year’s levels as prices climbed. Yet refiners this year will be required to blend 10% more biofuel. This means refiners will again hit the so-called “blend wall” of how much ethanol and biodiesel can technically be processed into the nation’s fuel supply. Higher ethanol blends can corrode older vehicle engines and fueling infrastructure. Refiners must purchase regulatory credits to comply with the mandates. Increasing credit prices have driven some small, independent refineries out of business. Small refineries can seek a temporary exemption from the mandates if they show a “disproportionate economic hardship.” But the biofuels lobby opposes these exemptions, and the EPA just denied 69 waiver requests. Some large refiners such as Marathon Petroleum and Phillips 66 have sought to comply with biofuel mandates by converting refineries to produce renewable diesel from vegetable oil. This also lets them cash in on a $1 a gallon federal tax credit and regulatory credits under California’s low-carbon fuel standard that some other states are copying. S&P Global Platts estimates that renewable diesel in California fetched a $3.70 a gallon premium over regular diesel in the early weeks of 2022 owing to tax and regulatory credits. This biofuel profit premium is driving the sort of capital misallocation that the World Bank noted last week in a report on economic growth and inflation. Chevron CEO Mike Wirth said recently that refineries are shutting down or being repurposed for renewable fuels because “the stated policy of the U.S. government is to reduce demand for the products that refiners produce.” When companies are told that demand for their product will become obsolete, it’s no surprise that they don’t invest in supply. In his letter Mr. Biden orders the refiners to increase supply pronto, but they have to make business decisions based on long-term market expectations. The same is true for oil producers. The President slams refiners for reaping record profits. Does he not understand markets? Refining petroleum is a low-margin business, and the companies lost money early in the pandemic as demand for gas and other fuels fell. Now margins have widened as demand rises again and the industry’s capacity to produce them has shrunk. The refining shortage was also predictable for those who follow events in California. Environmental regulations there have driven refineries to shut down and convert to biofuels, driving up prices and refiner profits. This is a major reason gas prices in California are averaging $6.44 per gallon—$1.43 more than the national average versus 30 cents in 2012. Mr. Biden demands that refiners propose “concrete ideas” to immediately increase capacity. How about his Administration stop trying to put them out of business? Appeared in the June 16, 2022, print edition.
I see this a lot. Poor messaging. We are in an environment (thx modern media) where messaging is king, not execution or reality. It's a sad environment that lead to hiring the best messengers, not the best person at execution. It has somewhat always been like that, but we have gotten so far away from valuing someone that is good at both to only valuing someone (or some party) that is good at messaging.
Liberals have spent the last 10 years promoting the ESG movement to deny bank funding to fossil fuel producers while also penalizing institutions from owning stock in fossil fuel producers. And they are surprised that there has been massive underinvestment in fossil fuels? These people don't understand cause and effect! This was their goal. And now the lower and middle class people must suffer in the form of significantly less quality of life because they are spending their money on gas and food. The stock market is in the toilet as well. Energy touches every single aspect of the economy. When energy costs rise, economic activity falls. It's that simple. This clearly shows how wrongheaded the liberals' energy policy has been for decades.
Joe promised to kill fossil fuels and began day 1. This period of transition is just collateral damage. API revealed a 10 point plan should the admin decide to delay the transition. https://www.api.org/news-policy-and...e-us-energy-leadership-fuel-economic-recovery 1. Lift Development Restrictions on Federal Lands and Waters The Department of the Interior (DOI) should swiftly issue a 5-year program for the Outer Continental Shelf and hold mandated quarterly onshore lease sales with equitable terms. DOI should reinstate canceled sales and valid leases on federal lands and waters. 2. Designate Critical Energy Infrastructure Projects Congress should authorize critical energy infrastructure projects to support the production, processing and delivery of energy. These projects would be of such concern to the national interest that they would be entitled to undergo a streamlined review and permitting process not to exceed one year. 3. Fix the NEPA Permitting Process The Biden administration should revise the National Environmental Policy Act process by establishing agency uniformity in reviews, limiting reviews to two years, and reducing bureaucratic burdens placed on project proponents in terms of size and scope of application submissions. 4. Accelerate LNG Exports and Approve Pending LNG Applications Congress should amend the Natural Gas Act to streamline the Department of Energy (DOE) to a single approval process for all U.S. liquefied natural gas (LNG) projects. DOE should approve pending LNG applications to enable the U.S. to deliver reliable energy to our allies abroad. 5. Unlock Investment and Access to Capital The Securities and Exchange Commission should reconsider its overly burdensome and ineffective climate disclosure proposal and the Biden administration should ensure open capital markets where access is based upon individual company merit free from artificial constraints based on government-preferred investment allocations.\ 6. Dismantle Supply Chain Bottlenecks President Biden should rescind steel tariffs that remain on imports from U.S. allies as steel is a critical component of energy production, transportation, and refining. The Biden administration should accelerate efforts to relieve port congestion so that equipment necessary for energy development can be delivered and installed. 7. Advance Lower Carbon Energy Tax Provisions Congress should expand and extend Section 45Q tax credits for carbon capture, utilization, and storage development and create a new tax credit for hydrogen produced from all sources. 8. Protect Competition in the Use of Refining Technologies The Biden administration should ensure that future federal agency rulemakings continue to allow U.S. refineries to use the existing critical process technologies to produce the fuels needed for global energy markets. 9. End Permitting Obstruction on Natural Gas Projects The Federal Energy Regulatory Commission should cease efforts to overstep its permitting authority under the Natural Gas Act and should adhere to traditional considerations of public needs as well as focus on direct impacts arising from the construction and operation of natural gas projects. 10. Advance the Energy Workforce of the Future Congress and the Biden administration should support the training and education of a diverse workforce through increased funding of work-based learning and advancement of STEM programs to nurture the skills necessary to construct and operate oil, natural gas and other energy infrastructure. Click here to view the plan.
Excellent letter from Exxon, detailing their MASSIVE investments in oil & gas production and the Administration's HORRIBLE policies.
the same company that denied climate change and spent $$$$$$$$ on lobbying efforts? that same company? LULZ
Forgiving $10,000.00 per student loan borrower to the tune of $375 billion will probably help inflation later this year
shitte, you know things are bad now Tesla increases prices amid rising supply costs https://thehill.com/business-a-lobb...la-increases-prices-amid-rising-supply-costs/
It’s sad but everyone is on the increase price bandwagon, and it’s seemingly not going to stop…a few short years ago, the majority of people laughed at $5 per gallon gas, now that’s the average.. next year $6, $7 will happen. Taco Bell has a sign hiring up to $16 per hr but how are these people going to afford getting to work?… Biden ran on a platform of being anti oil and gas. How is that working out now? We need leadership that is willing to handle issues affecting citizens right now! BBB failed internally. Get a better plan, heck let’s get better leadership
just got back from Mexico, guess what gas prices are down there? Buddy is about to go to the Middle East and checked the gas price in UAE, care to guess their direction of gas prices?
I'll help everyone out. Here is the gas prices as of June 13 data converted to USD and US Gallon. https://www.globalpetrolprices.com/gasoline_prices/ From the link: As a general rule, richer countries have higher prices while poorer countries and the countries that produce and export oil have significantly lower prices.
Supposedly(don’t know how true this is) until the fed funds surpasses the rate of inflation, it won’t curb it. Hence Volker going up to 20% for a few years. the downside of high rates is that almost everything is priced with rock bottom rates, so when rates go up to 5-10%, the price of bonds/houses etc will have to fall to compensate.
the Fed is to blame, the geniuses thought inflation was going to be transitory, they took waaay too long in raising rates
