Diesel Prices Jump 37% in 10 Weeks, Gas Prices Projected to Hit $6.20 by August
May 24, 2022
The White House is considering waiving U.S. gasoline environmental rules aimed at reducing summertime smog, hoping the waiver will combat rising pump prices, Reuters reported, citing three sources involved in the discussions.
Retailers are required to sell summer-blend gas from June 1 to Sept. 15. In the past, the U.S. government has waived those requirements regionally or nationally to deal with hurricanes or other supply issues. The Biden administration has already lifted the restriction on summer sales of E15. The waiver under consideration would apply to all grades of gasoline, the sources said.
The Reuters report indicates the blending items are things like butane and that such a move to waive the smog rules would apply to all grades of gasoline and does not signal any impact for ethanol. "These pollutants have severe impacts on public health and would likely exacerbate the inequity in air quality that BIPOC communities already bear,” activist green groups including Friends of the Earth, National Wildlife Federation and Sierra Club, wrote to EPA Administrator Michael Regan on Monday. The “potential savings from this measure are limited, while the climate impacts are irreversible. Solutions to oil price hikes lie elsewhere.”
This comes as gas prices are at record highs — a dollar more than one year ago — and one J.P. Morgan analyst predicted prices could reach $6.20 per gallon by August.
U.S. average retail prices for ultra-low-sulfur diesel rose more than 37% in just 10 weeks after Russia’s invasion of Ukraine, setting a new nominal record of $5.62 a gallon in the week ended May 9, according to the U.S. Energy Information Administration.
The Biden administration is considering a release of diesel fuel from federal reserves to address surging prices and the threat of supply outages on the East Coast. Officials have drafted an emergency declaration as prices have soared to record highs in recent weeks, White House spokeswoman Emilie Simons said on Twitter on Monday. Such a declaration would allow for the quick release of some of the 1 million barrels of diesel in the Northeast Home Heating Oil Reserve “if necessary,” she said. While the reserve only contains about one day’s supply, and might not substantially reduce diesel prices, it could prevent spot outages of the fuel, an official said. Diesel has outpaced gasoline prices because of refinery closings and because Russia was such a big supplier of refined fuels into Europe, causing ripple effects world-wide.
Possibility of Pumping More Oil?
If gas prices are so high, why aren’t shale drillers pumping more oil? The Wall Street Journal notes one reason: Their executives are no longer paid to. After years of losses, investors demanded changes to how bonuses are formulated, pushing for more emphasis on profitability. Now, executives who were paid to pump are rewarded more for keeping costs down and returning cash to shareholders. The focus on profitability over growth helps explain drillers’ muted response to the highest prices for oil and natural gas in more than a decade.
Possible Rebate for High Gas Prices?
Democrats float $500 rebate to combat gas prices. Americans would receive a $500 cash rebate under legislation being introduced today by Democratic Reps. Sean Casten (Ill.), Don McEachin (Va.) and Earl Blumenauer (Ore.) that would be paid for by eliminating tax subsidies for the fossil fuel industry.
The measure would eliminate 11 tax breaks for oil and gas companies, including for marginal wells and enhanced oil recovery. This bill comes after the House passed a bill last week that would give the Federal Trade Commission sharper teeth in preventing alleged gas price gouging by oil companies. The price gouging bill has hardly any chance of success in the Senate, where the Commerce Committee has a mark up on its own version of the price gouging bill Wednesday.
Growing Less Dependent on Fossil Fuels
Meanwhile, the International Energy Agency says governments around the world need to do more to spur faster growth in electric vehicles.
“Electric-car sales continue to break records, but mineral supply constraints are looming,” the IEA said in its latest EV outlook. “Much more needs to be done to support charging infrastructure and heavy-duty vehicles.”
The agency suggested officials ease bottlenecks for battery materials, enhance support for EV purchases and take action to kickstart the market for heavy-duty electric vehicles. Such efforts may help reach their goal of a 350 million global EV fleet. As it stands now, EVs aren’t selling fast enough for the world to have a realistic chance of avoiding the worst impacts of climate change, the group said Monday.