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US oil and gas exports are driving higher domestic prices

The US oil and natural gas industry has long struggled and over the last decade has finally won the release from federal restrictions that limit exports. The plausible reason is that the so-called “shale revolution” in the country’s oil and gas fields, the United States has enough oil and gas to export. The real reason behind the push is that the oil and gas industry wants what every American industry already has: the right to sell their products to most bidders no matter where they live.

It is almost certain that US consumers will suffer as US prices increase to match world prices. And, because energy prices affect everyone who votes, they are always politically affected.

So, this is not surprising with the US regular Gasoline prices are over $ 5 per gallon President Joe Biden He held a barrage of US oil companies-They have one of their best years – they say they need to increase the production of refined oil products. Companies have responded that their refineries are running near maximum capacity and therefore they cannot do much in the short term.

It is undeniable that the United States’ long-standing policy is to allow the export of refined (as opposed to crude) petroleum products such as gasoline, diesel and heating oil. The country has a significantly higher refinery capacity than domestic needs and therefore exports a considerable amount of refined products About 1 million barrels per day (mbpd) of gasoline and 1.4 mbpd diesel and heating oil (For the week ending June 10). If the US curtails such exports to reduce prices at home, the country will violate long-standing commitments to free trade and free markets, reduce supply and increase prices for consumers abroad.

The boom in US natural gas exports has also reduced US domestic natural gas supply Less than $ 2 per thousand cubic feet (mcf) of two years ago is being sent today for $ 7 per mcf. (It recently dropped from $ 9.) The cost of other chemicals, including residential and industrial heating and natural gas-based plastics and natural gas-derived nitrogen fertilizers, is rising.

Related: Why nuclear power is more relevant than ever

The boom in liquefied natural gas (LNG) exports now sends about 11 percent of US natural gas production abroad (based on shipping from January to March 2022). The volume of LNG exports increased by a factor of 50 from 2011 to 2021. (See these numbers from the US Energy Information Administration Here And Here.).

The world’s free-trade advocates have long insisted that all goods should be freely circulating around the world. These advocates believed that government policies should not favor or subsidize one industry over another. The idea was crystallized in 1992 when President Michael Boskin, the White House Council of Economic Advisers under President George Bush, asked whether the United States should have a policy of promoting domestic semiconductor production. “Potato chips, computer chips — what’s the difference?” He was reported to have said that.

The country is talking about the same things today. Whether the United States needs it Industrial Policy on SemiconductorsWhat? Must be the United States Cut down on oil exportsWhat? The debate over natural gas exports is likely to explode soon.

It turns out that what really matters is whether a country produces potato chips or computer chips. This was in the wake of the Russia / Ukraine conflict The sudden breakdown and wrenching realignment of the global trading system Countries around the world are facing a shortage of critical industrial goods, including food, fuel and semiconductors.

If countries increasingly decide that self-reliance and affordable domestic prices are more important for exportable goods than free trade, see more dustbin on whether governments should be more involved in setting industrial policies and determining what is and isn’t exportable.

By Kurt Cobb Resource Insights

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