Pumping gas by hand | Photo by Mark Buckawicki via Creative Commons 2.0
Part XLIII of the “EDEN America” Series
The policy and decision-makers at the White House forget that the United States is the biggest producer of crude oil and refined oil products in the entire world. They often keep quiet on the U.S. oil industry practices and pricing. And the number-one factor in the inflation rate is the price of energy, especially gasoline and other refined oil products.
According to a 2021 survey, as Googled, the average oil producer operating in the Eagle Ford oilfield in the U.S. needed WTI oil prices to amount to a minimum of 46 U.S. dollars per barrel to drill a new well profitably. Compare this to a break-even price of 17 U.S. dollars per barrel for existing wells. And yet the American oil industry follows the world pricing. Yes, the Brent Crude Oil pricing is the standard, and its (IFEU $/bbl) price for the (present) Front Month is $95.85. The OPEC follows almost the Brent Crude-Oil pricing by a few dollars less (per bbl) for the so-called “sweet crude oil.” To the uninitiated, “sweet crude oil” is a type of petroleum that the New York Mercantile Exchange designates as having less than 0.5% sulfur content.
The cost to refine gasoline varies between $0.40 and $0.70 per gallon, depending on whether summer or winter formulas are being used.
Again as Googled, if the price of crude oil is between $50 and $70 per barrel, depending on the type of crude oil purchased, a standard 42-gallon barrel translates to $1.19 to $1.67 per gallon at the pump. Excise taxes add another 49 cents a gallon on average nationwide. American consumers can live with crude-oil pricing from existing wells (inland, offshore, and by fracking) at an average of $50 per bbl. Or even lower.
“It must act urgently and swiftly in energy production and the wholesale-and-retail pricing of oil products. President Biden should simply form a Task Force composed of representatives of Cabinet offices that deal with energy.”
How come unleaded gasoline now retails per gallon in San Gabriel Valley of Southern California at $4.15 (at my neighborhood’s ARCO Station in cash or by debit card)? Or in other outlets of other major gasoline companies at $4.59 to $4.69? (Purchases by credit card are charged extra from $0.10 to $0.20). The ARCO stations traditionally sell all grades of unleaded gasoline at lesser rates — from $0.45 to $0.65 lower.
Many of the major gas companies have been accused of price gouging. It does not matter who the President is. I remember the lowest-grade unleaded gasoline price during the now-disgraced Donald J. Trump administration was $4.50 pg (for the lowest grade of unleaded gasoline) on April 22, 2019. It was easy to remember the date for it happened on Earth Day.
It must act urgently and swiftly in energy production and the wholesale-and-retail pricing of oil products. President Biden should simply form a Task Force composed of representatives of Cabinet offices that deal with energy. The Task Force should immediately investigate and file criminal charges against the erring corporations and their top executives — if price gouging is substantiated.
It is also suggested that the President may call first the presidents and CEOs of all the major gasoline and oil producers to a conference to act accordingly. And voluntarily. If they refuse to comply with Mr. Biden’s request to end price gouging, criminal charges should be filed against them.
There are present laws that may authorize — in national emergencies — for the government to take over the operations of oil fields and refining companies. The U.S. Army Corps of Engineers can easily supervise the current energy-companies employees — after their top corporate leaders are jailed while awaiting trial for the equivalent of “economic treason,” as one of the criminal charges.
The current pandemic is a national emergency. It is more than a war, as the COVID-19 virus has killed more Americans at a rate that will soon surpass the U.S. deaths suffered in World War II — at 1,076,245.
“Yes, President Biden can act boldly and set the price of unleaded gasoline — even in California — to less than $2.024 per gallon after reducing federal excise taxes. The U.S. Congress will act nearly unanimously and on a bipartisan accord. What member of the U.S. would stand in public in support of price gouging by the oil companies?”
Russia’s looming invasion of Ukraine is a potential trigger for a global conflict or at least the revival of a “cold war.” Therefore, the U.S. must immediately control better the production and refining of crude oil and other forms of energy — as it did during WWII.
Yes, President Biden can act boldly and set the price of unleaded gasoline — even in California — to less than $2.024 per gallon after reducing federal excise taxes. The U.S. Congress will act nearly unanimously and on a bipartisan accord. What member of the U.S. would stand in public in support of price gouging by the oil companies? And the entire oil-producing countries may be forced to follow the U.S. pricing on crude oil and refined oil products. Then it will reduce the world inflation rate to manageable levels. Because in the final analysis, soaring energy costs jump-start the rise of the inflation rate.
All the peoples in the world — and Americans, of course — will cheer and hail President Biden’s suggested immediate bold, if not bolder, action.