Another thought on fuel prices
As the U.S. now faces the highest fuel prices in years, the inevitable blame game again makes the news.
The very first point to remember is that oil is an extremely complex industry, and when anyone tries to sum it up in a sentence or two you can bet they are wrong.
It’s not the XL, it’s not Biden, it’s not the “greens," it’s not greed, it’s not “big oil.” There is no single cause for high fuel cost.
Here is what I believe is one leading cause:
In 1977, the last big refinery came on line in the U.S.
In that year, there were 142 million motor vehicles and 220 million people.
In 2020, there was 296 million vehicles, a 100% increase, and 332 million people, a 50% increase in 43 years.
In that same period, there was a 15% increase in refinery capacity. This alone should tell you something about fuel availability.
The trend was obvious years ago. Obama set new fuel standards for vehicles in 2012, in an effort to raise efficiency for environmental reasons and keep fuel costs down.
Trump was elected and promptly rolled those standards back far below what Obama wanted, to a very low 1.5% increase per year. (Obama wanted 5% increase per year in efficiency.)
Ukraine, western sanctions on Russian oil, OPEC, climate change, big investors divesting from oil industry, and the inherent difficulty in bringing more oil to market in short time frames, including the time it takes for new refinery construction, all add to the cost of fuel.