The US has been in a wicked circle of struggling with the growing inflation and record-high gas prices for almost half a year now.
The Biden administration is finally deciding to do something about it; although many would argue they’re the ones to blame for it all.
In August, Biden urged the US-based oil refiners to limit their exports in an attempt to have the gas prices settle down somewhat.
However, Exxon Mobil CEO Darren Woods quickly stepped in to warn these limitations could easily backfire. They could create an even greater oil supply crisis on the global scale, ultimately increasing the gas prices in the US once again.
Will Biden’s gas export strategy backfire and devastate the global oil supply?
A letter from Energy Secretary Jennifer Granholm shows her concerns with the US’ current gas reserves; she warned major refineries to halt exports in order to boost the country’s self-sustainability when it comes to fuel.
TEXAS: Exxon is pushing back against reductions of U.S. fuel exports urged by the Biden administration in August, arguing that restricting shipments would further squeeze global supplies and lift pump prices at home.
— KolHaolam (@KolHaolam) September 30, 2022
In the letter, she also threatens that if the refineries do not employ this strategy, the Biden administration will have to resort to other federal requirements and emergency measures to circumvent the low gas reserves.
However, Exxon explained the oil export from the US is integral to restabilizing the global oil market, especially now that Russian oil is no longer an option since the country has been cut off from the market, due to its invasion of Ukraine.
Looking at the bigger picture
In a response to the Energy Department, Woods wrote the current Gulf Coast exports need to be continued in order to rebalance the energy market with utmost efficiency. This won’t be possible if we focus on increasing the US reserves instead.
As you stuggle to buy food and fuel and florida is under water take a minute and be thankful Joe Biden sent Ukraine another 12 billion. Lest you be a bigot
— TheQuartering (Humble Bean Merchant) (@TheQuartering) September 30, 2022
Reducing global supply for the sake of momentarily dropping the gas prices locally is bound to backfire, aggravating the global supply chain failures and possibly driving the gas prices even higher in the process.
According to OilPrice, a website whose sole purpose is to track the global oil prices, they have settled down somewhat in the past month, but this, by no means, indicates we are in the clear when it comes to a global energy crisis.
Currently, the West Texas Intermediate, which has been the US benchmark for a while, fell to $80.19/barrel; whereas Brent Crude, the benchmark for Europe was $88.02 on Friday afternoon.
Yesterday, Joe Biden told gas stations to bring down the cost of fuel 'now.'
The last time I checked, mom and pop gas stations didn't lay off 11,000 Keystone XL pipeline workers.
— Kimberly Guilfoyle (@kimguilfoyle) September 27, 2022
Despite all of these warnings, the Energy Department continued its efforts to decrease the local gas prices, addressing the issue of the extremely low oil and gas levels throughout the country, instead of looking at the bigger picture here.
Woods continued to advocate for the free market regulating itself, even if it does prolong the current gas crisis somewhat. The end result would be the stabilization of the global oil market, which wouldn’t be the case if the US halts oil exports in favor of building up reserves.
This article appeared in The Record Daily and has been published here with permission.