Gasoline and diesel prices will remain high regardless of the results of the 2022 midterm elections, according to an industry analyst.
“Regardless of tonight’s election results: #GasPrices will remain above average, since politicians are not the active reason why they are above average,” tweeted Patrick De Haan, head of of petroleum analysis at GasBuddy.
De Haan further noted that diesel prices will also remain “historically high, because politicians are not the active reason why they are historically high.” The oil and refined products analyst cited a variety of reasons pump prices remain high, including the coronavirus pandemic and geopolitics. tensions.
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AAA reports that the national average price for regular gasoline as of Wednesday is $3.80 per gallon. That’s four cents more than a week ago and nearly 40 cents more than a year ago. Still, that’s well below the all-time high of $5 a gallon, which was hit in early June.
High gas prices have been a stumbling block for the Biden administration ahead of the midterm elections, but analysts have argued that many factors are weighing on prices at the pump, including Russia’s war on Ukraine. and OPEC+’s decision to drastically cut production by 2 million barrels per day. from November.
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“The recent reduction in OPEC+ production quotas has helped to tighten supply,” Lipow Oil Associates President Andy Lipow told FOX Business.
Meanwhile, the European Union plans to enact a ban on the purchase of Russian crude oil by early December, according to Reuters. This will add “to difficulties for refiners to obtain oil to meet consumer demand,” Lipow added.
Crude oil accounts for more than half of what consumers pay at the pump, according to the US Energy Information Administration (EIA). When the oil supply is interrupted, prices at the pump are likely to rise.
The group’s latest weekly oil report showed that gasoline production increased last week, averaging 9.8 million barrels per day. Distilled fuel production increased last week, averaging 5.2 million barrels per day.
Another factor keeping pump prices “stubbornly high” are refinery outages in the Midwest and West Coast. These outages “have impacted supply at the same time national inventories have been reduced and are now 4% lower than a year ago,” Lipow added.
Similarly, the EIA told FOX Business last month that the geopolitical risks associated with Russia’s full-scale invasion of Ukraine, production cuts announced by OPEC+ and global gas supply natural and coal are global factors affecting energy commodity prices.
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The Biden administration said it was taking steps to “strengthen energy security, address supply shortages and reduce costs” in response to “Putin’s rising pump prices.”
This includes a plan to release 15 million barrels of Strategic Petroleum Reserve (SPR) for delivery in December, which will complete the 180 million barrel draw announced by Biden last spring.
The administration says the move helped “stabilize crude oil markets and lower prices at the pump.”
Meanwhile, Nick Loris, vice president of public policy at C3 Solutions, told FOX Business that the extra 15 million barrels will help, “but not much.”
Loris said the barrels will be spread over a 30-day period and in a single day America consumes about 20 million barrels.
“Globally, the 15 million barrels is equivalent to a few hours of consumption,” he said. “It’s not really going to move the needle on prices at the pump, especially since the market is already pricing in the release of reserves.”
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Still, Loris noted that it’s “difficult to precisely isolate the effect of the release on the market because of all the other variables that affect the global oil market.”
According to a Treasury Department study in July, the SPR release and Biden’s total release lowered prices from 13 cents per gallon to 31 cents per gallon.
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