U.S. gasoline and diesel prices have been sliding the past couple of months, but there's still a lot of angst among politicians and the general public about the cost of motor fuels — and who's to say prices at the pump won't soar again, spurring another round of proposed "fixes" to the markets for crude oil and refined products. Among the proposals floated when prices spiked this spring were bans on the export of U.S.-sourced crude, gasoline and diesel, the idea being that suspending exports would increase the supply available to domestic markets and thus bring down prices. If only it were all so simple! In today's RBN blog, we discuss the complicated ins and outs of oil, gasoline and diesel imports and exports, and the many effects of putting the kibosh on shipments to international markets.
From early January to mid-June this year, the average weekly U.S. retail price of regular unleaded gasoline increased 53% (from $3.27/gal to $5.02). The sharp rise was largely driven by a comparable increase in the price of crude oil, refineries' primary feedstock, which in turn was exacerbated by Russia's late-February invasion of Ukraine and subsequent sanctions against Russian exports by the U.S., Europe and others. The daily spot price for benchmark light sweet WTI at Cushing started 2022 at about $76/bbl, and peaked in the low $120s in early March and again in early June. Since then, the retail price of "regular" has decrease to $4.06/gal. And WTI? It has bounced around a lot, depending on the events of the day or week, but has lately been hanging around $90/bbl, the lowest levels since Russia's invasion.
As we discussed a few months ago in I Want to Break Free, the Biden administration has considered a number of steps to put a lid on rising energy prices, including a suspension of the federal gasoline tax, a windfall profits tax on producers and refiners, and releases from the Strategic Petroleum Reserve (SPR) — the last of which was actually implemented and is still ongoing. Last October, Energy Secretary Jennifer Granholm even hinted at the possibility of reinstating the ban on most U.S. crude oil exports, a prohibition that was lifted by Congress and President Obama in December 2015. (Granholm said at a conference that a new ban on exports was "a tool that we have not used, but it is a tool." By December 2021, she said a new export ban was off the table.)
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