Energy Secretary Jennifer Granholm joined CNN’s Jake Tapper on Friday to discuss the approximately 50 cents per gallon increase in the national average price of gas in the U.S. since President Joe Biden took office.
Tapper reminded her that Republicans are blaming Biden Administration policies for their pain at the pump.
In a plaintive voice, she said, “We need to get the virus under control first. We need to get to that 70 percent. We need to get to herd immunity. You know, why, why have gas prices gone up? Could that be because of the virus itself – as well? I mean, everything is tied together.”
Granholm is partially correct. As the economy strengthens, demand for gas rises which naturally drives up the cost.
And yes, everything is tied together. Price is determined by multiple factors, the most significant outside factor being the behavior of OPEC nations. For example, CNBC explains how tensions between Russia and Saudi Arabia caused oil prices to plummet to 24-year-lows in early March 2020.
Shortly afterward, OPEC nations agreed to place curbs on oil output in reaction to a decrease in demand due to the pandemic and prices stabilized.
Over the last few months, OPEC members have been slowly lifting those curbs as world demand picks up.
Forbes‘ David Blackmon writes that we typically pay a little more in March and April as refineries conduct annual maintenance on equipment and change “from manufacturing a handful of winter blends of gasoline to the dozens of summer blends required by the EPA.”
Even trader expectations can cause short-term fluctuations in the value of oil.
Sorry Secretary, but according to Blackmon, the November election “played a big role” in the recent run-up in gas prices. “Since last November 3, the average price per gallon of regular gasoline in the U.S. has skyrocketed by 75 cents. The markets clearly see the Biden/Harris administration as one that will work to inhibit U.S. oil production, which will also have the effect of tightening the global market, and traders have responded by driving up the price of crude oil.”
Categories: Oil industry