XPost: alt.society.futures, talk.politics.guns, sci.geo.petroleum   
   XPost: sac.politics   
   From: Nic@none.net   
      
   On 6/18/22 1:54 AM, Russell wrote:   
   > By CNN COM WIRE SERVICE |   
   > PUBLISHED: June 6, 2022 at 10:40 a.m. | UPDATED: June 6, 2022 at 3:49 p.m.   
   >   
   > Russia’s invasion of Ukraine is a major reason that US drivers are paying   
   > record prices for gasoline. But it’s not the only cause of the spike.   
   >   
   > Numerous factors are pushing prices up, with regular gasoline hitting a   
   > record $4.87 a gallon Monday according to AAA’s survey — up 25 cents a   
   > gallon in just the last week.   
   >   
   > Gas prices were already expected to breach the $4 a gallon mark for the   
   > first time since 2008, with or without shots fired in Eastern Europe or   
   > economic sanctions imposed on Russia. But now the national average is   
   > expected to hit $5 a gallon within the next two weeks, said Tom Kloza,   
   > global head of energy analysis for the OPIS, which tracks gas prices for   
   > AAA.   
   >   
   > “I think we reach $5 somewhere between this weekend and   
   > Juneteenth/Father’s Day weekend,” he said.   
   >   
   > It was back in March that prices first broke the record of $4.11 a gallon,   
   > which had stood since 2008. That now seems like the good old days: The   
   > national average has been rising steadily for the past month, setting 27   
   > records in the last 28 days.   
   >   
   > More than one out of every five gas stations nationwide is now charging   
   > more than $5 a gallon for regular, and just more than half are charging   
   > $4.75.   
   >   
   > There are 10 states, plus Washington, DC, where the average price is   
   > already at $5 or more: Alaska, Arizona, California, Hawaii, Indiana,   
   > Michigan, Illinois, Nevada, Oregon and Washington. Several more are within   
   > a penny of $5, so those states’ prices are likely only a day or two at   
   > most from crossing the mark.   
   >   
   > That’s because there’s a number of reasons beside the disruption of   
   > Russian oil exports driving prices higher according to Kloza. And making   
   > predictions about where prices will go has proved difficult. As school let   
   > out and summer travel picks up, so will gasoline demand and price, he   
   > said.   
   >   
   > “Anything goes from June 20 to Labor Day,” Kloza said. “We could   
   certainly   
   > see the national average approach $6.”   
   >   
   > Here’s what’s behind the record price surge:   
   >   
   > Russia’s invasion of Ukraine   
   > Russia is one of the largest oil exporters on the planet. In December it   
   > sent nearly 8 million barrels of oil and other petroleum products to   
   > global markets, 5 million of them as crude oil.   
   >   
   > Very little of that went to the United States. In 2021 Europe got 60% of   
   > the oil and 20% went to China. But oil is priced on global commodity   
   > markets, so the loss of Russian oil affects prices around the globe no   
   > matter where it is used.   
   >   
   > The concerns about disrupting global markets led Western nations to   
   > initially exempt Russian oil and natural gas from the sanctions they put   
   > in place to protest the invasion.   
   >   
   > But in March the United States announced a formal ban on all Russian   
   > energy imports. And last week the EU announced a ban on imports of Russian   
   > oil by ship, which represented about two-thirds of the oil European   
   > nations imported from Russia. Russia’s oil is slowly and steadily being   
   > removed from global markets.   
   >   
   > China lockdowns ending   
   > One factor keeping oil prices somewhat in check has been the surge of   
   > Covid cases, and strict lockdown rules in much of the country. That was a   
   > major drag on demand for oil.   
   >   
   > But as the Covid surge has started to retreat, the lockdowns are being   
   > lifted in major cities such as Shanghai. And more demand without increased   
   > supply can only drive up prices.   
   >   
   > Less oil and gas from other sources   
   > Oil prices plunged when pandemic-related stay-at-home orders around the   
   > world crushed demand in the spring of 2020, and crude briefly traded at   
   > negative prices. In response, OPEC and its allies, including Russia,   
   > agreed to slash production as a way to support prices. And even when   
   > demand returned sooner than expected, they kept production targets low.   
   >   
   > US oil companies don’t adhere to those types of nationally mandated   
   > production targets. But they have been reluctant or unable to resume   
   > producing oil at pre-pandemic levels amid concerns that tougher   
   > environmental rules could cut future demand. Many of those stricter rules   
   > have been scaled back or failed to become law.   
   >   
   > “The Biden administration is suddenly interested in more drilling, not   
   > less,” Robert McNally, president of consulting firm Rapidan Energy Group,   
   > said earlier this spring. “People are more worried about high oil prices   
   > than anything else.”   
   >   
   > It takes time to scale up production, particularly when oil companies are   
   > facing the same supply chain and hiring challenges as thousands of other   
   > US businesses.   
   >   
   > “They can’t find people, and can’t find equipment,” McNally added.   
   “It’s   
   > not like they’re available at a premium price. They’re just not   
   > available.”   
   >   
   > Oil stocks have generally lagged the broader market over the last two   
   > years, at least until the recent run-up in prices. Oil company executives   
   > would rather find ways to boost their share price than increase   
   > production.   
   >   
   > “Oil and gas companies do not want to drill more,” Pavel Molchanov, an   
   > analyst at Raymond James, said earlier this spring. “They are under   
   > pressure from the financial community to pay more dividends, to do more   
   > share buybacks, instead of the proverbial ‘drill baby drill,’ which is   
   the   
   > way they would have done things 10 years ago. Corporate strategy has   
   > fundamentally changed.”   
   >   
   > One of the starkest examples: ExxonMobil last month announced first   
   > quarter profits of $8.8 billion, more than triple the level of a year ago   
   > when excluding special items. It also announced a $30 billion share   
   > repurchase plan, far more than the $21 billion to $24 billion it expects   
   > to spend on all capital investment, including searching for new oil.   
   >   
   > Not only is oil production lagging behind pre-pandemic levels, US refining   
   > capacity is falling. Today, about 1 million fewer barrels of oil a day are   
   > available to be processed into gasoline, diesel, jet fuel and other   
   > petroleum-based products.   
   >   
   > State and federal environmental rules are prompting some refineries to   
   > switch from oil to lower carbon renewable fuels. Some companies are   
   > closing older refineries rather than investing what it would cost to   
   > retool to keep them operating, especially with massive new refineries set   
   > to open overseas in Asia, the Middle East and Africa in 2023.   
   >   
   > And the fact that diesel and jet fuel prices are up far more than gasoline   
      
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