by Government policies matter!
I am getting a little annoyed with people saying that the reason for high gas prices is supply and demand. That it was because of Covid-19 and the lock downs causing people to not travel much. That once people started traveling again the prices went up. Well, they are only part right.
One, gas prices were way cheaper before the pandemic hit then they are now.
Two, right after President Trump was elected he reversed a lot of environmental restrictions, government red tape, and opened up a lot more land to lease for oil exploration, especially off shore, to help reduced the cost of oil production. One of Trumps plans was to become truly energy independent and with that it takes time. This created an oil boom in the US oil market and US oil companies were soon producing more oil than they could sell. This also made it so we no longer had to purchase oil from over seas companies to make up the demand, which made the US energy independent for the first time since 1957 in October of 2019.
Biden Reversed Trump’s Policies
On the first day President Biden became president, he reversed all of Trump’s energy policies with the swipe of a pen. He also added more restrictions than were in place under the Obama administration to support this new green environmental agenda. This put a choke hold on US oil companies which dramatically reduced the amount of US production.
The oil industry has to develop technologies that work around those restrictions, plus they have to financially deal with government red tape and legal action. Also, not all land that they are allowed to drill on is a good producer of oil or produces any oil at all. When the oil companies start losing money then they reduce production and look for other ways to make money.
Biden shut down the development to the keystone XL pipeline which would deliver crude oil to US refineries efficiently. Oil prices are also based on futures in which the way oil and other commodities is traded in the stock market. Shutting down the pipeline affected the futures of US oil industry and the price of today.
Government Policies Affect Consumer Prices
The government does affect oil prices when imposing strict laws and harsh environmental restrictions that is put on the oil industry. We are now back to buying oil from overseas suppliers like OPEC. Biden also signed an executive order on “truck and car emissions”, which puts a strain on delivery and transportation costs. Raising taxes on businesses also gets diverted to the consumer. Government policies can have a dramatic influence on the US economy and the this is just one example on how the government has currently cause this nation wide spike in inflation.
~Cheers!!
Alan
