Gasoline prices rose to record highs in the United States after Russia invaded Ukraine. But the U.S. is the largest oil producer in the world and imports very little petroleum from Russia. So why did prices jump?That's such a good explanation of oil production, refining, distribution, and markets that I'm tempted to show it to my students, especially since I'm lecturing on energy and mineral resources in my environmental science classes right now and will soon be doing the same in my geology classes. I don't know if I'll have the time. Instead, I'm sharing it with my readers, who I hope learn something from it. I know I did, which was about the mismatch between the oil the U.S. produces and what our refineries require. I did not know that until recently.
Because oil is a global commodity and supply or demand shocks can reverberate around the world. There are also other factors that have made it challenging for oil producers to respond - foreign and domestic U.S. producers have been pulling back production in recent years. A series of boom and bust cycles and the effects of the coronavirus pandemic have drained the industry of qualified personnel and made companies wary of big investments.
By the way, Calculated Risk not only keeps track of the trade deficit, but breaks out the contribution of petroleum and petroleum products to the trade deficit.
For the past two to three years, petroleum has contributed little or none to the trade deficit and actually produced a small surplus during 2020, in contrast to the twenty years before that, where it made up a significant portion of the trade deficit. That's why I'm not as concerned about oil prices causing a recession now as I was in 2001 or 2008 (or will be again by the end of this decade). Then, a lot of the money being spent on petroleum was leaving the country, which will reduce GDP even without decreased economic activity. Enough of that will technically tip the country in to recession. Most of the money being spent on petroleum now stays in the U.S., which won't reduce GDP directly, although it will cause other economic hardships and move enough money around in ways that could cause a recession indirectly. PBS NewsHour updates the effects in U.S. lawmakers grill oil executives about sharp rise in gas prices.
Since Russia’s invasion of Ukraine, fuel prices have shot up and stayed high. Lawmakers on Capitol Hill Wednesday were laying blame for rising gas prices on executives from BP, Chevron, Shell, ExxonMobil and others. Meanwhile, everyday Americans are feeling the pressure. Amna Nawaz reports.PBS is showing both sides trying to score political points, Democrats against big corporations and Republicans against environmental regulation. It's no surprise that I'm on the Democrats' side on this. However, if CNBC is correct about gasoline and diesel retailers being reluctant about lowering prices at the pump so that they can recoup losses incurred on the way up, then gas station owners are to blame for the continued high cost of fuel. That would mean beating up on local small businesses. I don't think that would play well for either party's politicians, who would rather be seen as defending the public against big business or "big government." That doesn't mean it can't be done. Bill Schuette did exactly that in Michigan ten, nine, and seven years ago. It didn't help him much, as he lost to Gretchen Whitmer for Michigan Governor. That might serve as a bad example that Congress doesn't want to follow, even when both parties are upset about gas prices as they continue to drop.
Follow over the jump for a brief retrospective.
I shared Trevor Noah and 'The Daily Show' explain why gas prices are so high from November 20, 2021 at the Coffee Party USA Facebook page, which was helped it earn ~1,320 default and 1,624 raw page views, which tied it with Meyers and Colbert take closer looks at Marjorie Taylor Greene's permanent Twitter suspension and CNN's New Year's Eve party for fifteenth place according to default page views and eighteenth overall and sixteenth among entries actually posted during the blogging year according to raw page views. It placed sixth according to default page views with 609 views, fifth overall and fourth among entries posted during November 2021 according to raw page views with 728, so its page views have more than doubled since the end of November.
I have one more post about "The Daily Show" to cover, Trevor Noah, CBS News, and PBS NewsHour explain 'The Great Resignation'. Stay tuned for that after I complete my retrospectives about top posts featuring "Saturday Night Live" tomorrow.
Previous posts in this series
- Happy International Day of Nowruz 1401 (2022) and happy 11th birthday to Crazy Eddie's Motie News
- Statistics for the eleventh year of Crazy Eddie's Motie News
- Stephen Colbert on missing Trump White House phone records and Ginni Thomas's texts updates the attempt to overturn the 2020 election
- PBS Eons reflects on Piltdown Man for April Fools Day, a Flashback Friday holiday special
- Ramadan begins, a holiday special
- 'SNL' satirizes 'Fox & Friends' in its Supreme Court cold open
- PBS Terra asks 'Could The Next Blackout Be More Deadly Than Katrina?'
- Colbert and others have a good laugh at Zuckerberg saying his employees call him 'Sauron'