The signs of inflation are everywhere – from the grocery store to the gas pump. And, as we head into winter, rising costs are hitting Americans’ home heating bills, too. Everywhere people go, they are having to spend more money, and people are looking to their elected officials to help ease the “pain at the pump.”
In recent days, there have been calls for US Secretary of Energy to tap into our nation’s Strategic Petroleum Reserves (SPR), as a plea to help alleviate rising gasoline prices.
While pulling some crude from SPR could be helpful in the event of extreme supply disruptions – such as natural disasters or terrorist events – it would do little to actually affect gasoline prices in the near term and may even do more harm than good in the long term. That’s because oil and natural gas are global commodities. Gasoline prices are a result of supply and demand. As the economy recovers and demand increases, there is upward pressure on prices.
In 2011, when the Obama Administration tapped SPR during a civil war in Libya causing market fears resulting in major disruption to the oil markets, gas prices dropped only 2 percent after SPR was tapped – and for only two weeks. After that, pump prices rebounded to above the pre-release level for much of that summer.[i]
Natural gas prices are also mainly a function of market supply and demand. Factors on the supply-side that affect prices include natural gas production, net imports, and storage inventory levels. Increases in supply tend to pull prices down, while decreases in supply tend to push prices up. As we head into winter, Americans’ home heating bills are also being hit by rising inflation. And, tapping SPR does nothing to affect home and business’ heating costs.
The better approach to help alleviate rising energy prices is to focus on supporting domestic production of oil and natural gas. The Biden Administration – from the Department of Energy to the Interior Department to EPA – should support made-in-America oil and natural gas as a tool to help keep energy costs low and stable.
The problem is evident to the American people: rising energy costs. And, this problem is getting worse when the Administration shuts down pipelines, pauses federal oil and natural gas leasing, calls for punitive new energy taxes – like the new natural gas tax proposed by Congress – and imposes costly, duplicative regulations.
The anti-oil and natural gas policies that the Administration has been pursuing have a dampening effect on domestic investment, jobs, and production. When the Administration signals a shift away from fossil fuels – and takes policy and regulatory action accordingly – uncertainty and disruption enter the market.
The solution should be clear to our nation’s leaders:
- Do not raise taxes and impose punitive fees on the industry,
- Do not restrict access to federal lands and waters,
- Stop blocking the pipelines and infrastructure needed to efficiently, safely, and cleanly move the energy from the wellhead to the customer, and
- Avoid costly new regulations.
AXPC would like to work with the Administration and have constructive discussions about practical solutions that help keep gas and energy costs low, while also supporting our jobs, our economy, and our national security.
About the American Exploration and Production Council:
AXPC is a national trade association representing the largest independent oil and natural gas exploration and production companies in the United States. We lead the world in the cleanest and safest onshore production of oil and gas, while supporting millions of Americans in high-paying jobs and investing a wealth of resources in our communities. Learn more at https://www.axpc.org/