Timothy Birdnow

True enough but gas prices here in The 'Lou are only about a dime lower than they were two years ago.

White House touts lowest Labor Day gas prices since 2020

It is true it takes a long time to get oil fields up and running. Also, there is a backlog of refinery capacity as the last really big refinery built in the U.S. was in 1976, for crying out loud, and smaller ones were built as late as '79. We were using a fraction of the oil then as now.

But oil is a commodity, and it's traded on the open market, meaning the threat of pressure from more American oil on the market should push all producers into slashing prices. They don't seem to have done so, and that is likely because of the Russo-Ukrainian war and the associated embargo of Russian oil. The Saudis and Kuwait and the other big oil producers need not worry now about American oil coming online; they are poised to make nice profits.

So while Mr. Trump is right to tout this accomplishment it isn't as all-fired great as it may seem, at least to most consumers. I know there are blue states with much higher gasoline prices so it's apparent to them when the price drops.

So why haven't prices come down more dramatically?Well, for starters, the EPA is on the American consumer. It is also still requiring Reformulated gasoline aka "designer gas" in big cities, thus forcing an endless blending of gas with cheap filler in area-dependent grades. All of this drives up the price of gasoline. Lee Zeldin seems to be asleep at the wheel.

Oh, and even though Trump restarted the Keystone XL pipeline project a major rupture in the line in North Dakota has once again stalled the project.

So prices haven't come down as much as we would like and this hurts the American economy.

But then Trump can't lower prices too low for oil because American oil and gas are not just drilled from the ground. They require hydraulic fracturing (fracking) and that is more costly than simple oil wells (such as those in Saudi Arabia or even Russia). If oil prices drop too low American oil companies cannot make money. They postpone drilling in favor of modernizing their equipment and doing other things, while seeking oil overseas. It's a catch-22; drill too much and our companies go broke, drill too little and the prices are too high. There is a sweet spot and we likely are in it right now.

But don't get me wrong; oil and gas prices are doing well and we have every reason to be happy. But I would like to see them much lower.

That is why, I suspect, Trump is pushing places like India so hard to buy American; it defunds Putin and at teh same time funds us. But we aren't going to see $180 per gallon gas anytime soon with the current policies.

Gas was $2.89 per gallon when I filled up a couple of days ago.

I like what we are doing but we need to do more - especially with the EPA. Corn is food, not fuel, and we need to start treating it like that.

Posted by: Timothy Birdnow at 08:01 AM | Comments (4) | Add Comment
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