Jeff Chiu/AP Photo
Across the country, gas prices are rising again, and not necessarily in tandem with the price of oil.
I paid $6.29 a gallon for gas yesterday at what my wife and I call “the cheap gas station.” Prices in Southern California had gone up every day for over a month, about $1.25 in all, before finally subsiding yesterday. The average price is higher than the peaks of early summer, before oil prices fell significantly. Gov. Newsom ordered a switch to the cheaper “winter blend” a month before normal, which will take the edge off somewhat. But unnamed “refinery problems” have been blamed for the divergence between national and California prices, with real relief expected sometime after November. Hmm. There’s nothing important happening in early November where the psychological toll of high gas prices might make an impact, is there?
Across the country, gas prices are rising again, in fact, and not necessarily in tandem with the price of oil. There as well, refinery issues have been discussed as the cause. “Crack spreads” (a measure of the cost of refining) have climbed back up after decreases in August and September. But capacity losses, some from a deadly refinery fire in Ohio last month and a separate one at an even bigger refinery in Indiana, seem to be the culprit. As Severin Borenstein explained to me in June, it’s hard to differentiate between accidents or maintenance and business decisions to goose the price. “It’s easy for a company to say, ‘We’re not intentionally restricting output, we have this glitch,’” Borenstein said then.
None of this was helped by the OPEC+ decision yesterday to cut oil production by two million barrels per day in the coming months. The incredibly unwise diplomacy from the Biden administration, fist-bumping with the murderer of Jamal Khashoggi, led to absolutely nothing. But the real-world impact of this cut will be muted. Many OPEC nations aren’t hitting their quotas anyway, so some of these “cuts” just reflect current realities. But the announcement should add something like 15 to 30 cents to the average cost per gallon in the U.S.
That’s bad news for the party in power right before the midterms, given the effect of prices on the national mood. Candidates across the country have attempted to blame high prices on corporate greed, and honestly the suspiciously timed refinery maintenance operations should get a lot of attention here. But voters probably aren’t schooled in the ins and outs of unplanned refinery maintenance announcements. They want to see results.
It’s in this context that the Biden administration is preparing to ramp down sanctions on Venezuela, allowing Chevron to pump oil there. But that has not been finalized, and even if it is, turning the spigot on wouldn’t have a major impact overnight, though it would give oil markets a psychological lift.
The even broader context is the necessity of a national policy to end the use of the internal combustion engine as soon as possible. Propping up and/or begging authoritarian regimes for the petroleum within their borders carries grave consequences, as does oil companies hijacking our economy and national elections simply by shutting down a refinery. There’s an environmental imperative to finding a way out of these dynamics, but we shouldn’t discount the political imperatives as well.
