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Guest essay by Eric Worrall

Conspiracy, Putin or Biden’s green transition inspired cancellation of petroleum mining leases and pipelines? All three explanations have been proposed.

Rising Gas Prices Have Drivers Asking, ‘Is This for Real?’

The average price of a gallon of gasoline is up more than 10 percent in the last week, leading some consumers to rethink their routines and spending.

Gas prices were already increasing before the invasion last month, as oil suppliers scrambled to keep up with rising demand from consumers and businesses recovering from Covid disruptions. But calls in recent days from U.S. lawmakers and others to ban Russian oil imports have spurred worries about another hit to global supplies. Prices at the pump, in turn, soared rapidly.

“It’s sad that if I stop going to a restaurant, a toxic cycle will be created,” said Mr. López. “If I stop spending money on a restaurant, they’ll get less income and people could lose their jobs.”

Read more: https://www.nytimes.com/2022/03/08/business/high-gas-prices.html

What is causing the price rise? Elizabeth Warren thinks its a big oil conspiracy, to undermine the Biden administration maybe?

Senator Warren’s Oil Price Conspiracy Theory

Michael Lynch Senior Contributor Energy I Analyze Petroleum Economics And Energy Policy.
Nov 29, 2021, 08:11am EST

Take for example, the recent appearance by Massachusetts Senator Elizabeth Warren on Joy Reid’s MSNBC show, where the host expressed consternation that people had been staying home but gasoline prices had risen anyway. In response, the senator replied, “If this were just ordinary inflation, we might see prices go up, but prices at the pump have gone up why? Chevron CVX +5.1%Exxon, have doubled their profits. This isn’t about inflation, this is about price gouging for these guys.” 

Read more: https://www.forbes.com/sites/michaellynch/2021/11/29/senator-warrens-oil-price-conspiracy-theory/?sh=41ec8f7422b0

If prices rise, the normal response is to increase supply, to cash in on higher prices. But something is preventing that from happening. In my opinion, Warren’s continued conspiracist ideation has been undermined by other democrats being very open about their opposition to more domestic production.

Amid War, Biden Reluctant to Unleash Clean Energy Rhetoric

The U.S. president has not followed Europe’s calls to produce more renewable energy to weaken Russia’s global influence

“We can’t let the fossil-fuel industry scare us into a domestic drilling free-for-all that is neither economically warranted nor environmentally sound,” House Natural Resources Chair Raúl Grijalva (D-Ariz.) wrote Friday in a Guardian op-ed.

“The U.S. is the world’s top oil and gas producer. Doubling down on fossil fuels is a false solution that only perpetuates the problems that got us here in the first place,” he wrote, calling for more investments in renewable energy as a way to “cut the lifeline to fossil-fuel despots like Putin.”

Read more: https://www.scientificamerican.com/article/amid-war-biden-reluctant-to-unleash-clean-energy-rhetoric/

Kamala Harris and Buttigieg have compounded the perception of open democrat opposition to more drilling, by pushing the “let them eat cake” solution, telling people who are struggling financially that they need to somehow come up with 10s of thousands of dollars to buy an electric vehicle, or switch to public transport. Public transport might work for some people, but not for everyone – public transport is frequently dirty, inconvenient or unsafe, especially for single women working night shift.

Kamala Harris, Pete Buttigieg slammed for ‘tone-deaf’ e-vehicle push as gas skyrockets

By Steven Nelson March 7, 2022 

Vice President Kamala Harris and Transportation Secretary Pete Buttigieg were criticized Monday for a “tone-deaf” event focused on promoting electric buses as gas prices soared for most Americans.

Read more: https://nypost.com/2022/03/07/kamala-harris-pete-buttigieg-slammed-amid-high-gas-prices/

Rep. Markwayne Mullin (R-Okla.), a member of the House Energy and Commerce Committee, tweeted, “The Biden Administration could not be more tone-deaf.”

“Vice President Kamala Harris and [Transportation] Secretary Pete Buttigieg spent the afternoon promoting electric vehicles and Green New Deal policies. 

“Are you kidding me?” Mullin wrote.

Read more: https://nypost.com/2022/03/07/kamala-harris-pete-buttigieg-slammed-amid-high-gas-prices/

Even if the cost of batteries drops, electric vehicles will never be a solution for poor people. Poor people rarely purchase new vehicles, a $1000 decade old gasoline vehicle suffices for their needs, just like the old wreck of a vehicle I owned when my business was first getting started.

I doubt old electric vehicles will be as useful to poor people as old gasoline vehicles, when you consider how quickly batteries deteriorate compared to gasoline engines, and how much it costs to replace a battery vs say reconditioning a gasoline engine. In any case, there are simply not enough old electric vehicles available to make this a viable option for poor people, the foreseeable future.

Everyone knows that more oil drilling and gasoline production will bring down prices, supply and demand is a concept everyone gets.

Elizabeth Warren’s conspiracy theories are clever, a lot of of people don’t trust big corporations. The interesting thing is there might be a grain of truth to her claims – Biden’s constraint of the supply of new leases and pipeline bans has effectively removed the threat of competition from upstarts and new entrants, which has made it easier for incumbents to manipulate the market, should they choose to do so. But Warren fails to explain clearly what she plans to do about the alleged price fixing.

Threatening oil companies with legal sanctions will not fix this situation. Price fixing and legal threats wreck the future supply pipeline. People hold onto their investment money or move it to safety, when they are worried about expropriation, legal or otherwise. Just saying there is a conspiracy does nothing to reduce gasoline pump prices.

The easiest way to break the monopolies Elizabeth Warren alleges have arisen is to remove barriers to entry for new producers, say by relaxing drilling bans and pipeline cancellations, and encouraging a “domestic drilling free free-for-all”.

So long as Democrats cannot or will not provide a genuine solution, cheaper oil or an economically accessible alternative to cheaper gasoline, continued political impediments to greater domestic oil production will be seen by the majority of voters for what they are – playing politics with people’s lives.

via Watts Up With That?

March 8, 2022