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By Stacy M. Brown, NNPA Newswire Senior National Correspondent
The average price of a gallon of gas has hit record highs in Los Angeles and Philadelphia.
This week, prices rose four cents nationwide and consumers wondered why the cost was so high.
A study of fact sheets provided by the American Petroleum Institute suggests the complicated answer includes more production in America, which could add more supply. “More US sourcing means relief for the global market,” Lem Smith, API vice president for federal relations, wrote in an op-ed.
“America has an abundance of resources under our feet, and policymakers should send a clear message that America is open to energy investment,” Smith said.
API noted that gasoline prices are determined by supply and demand for crude oil and spending on refining, distribution, retailing and taxation. These fundamental market realities drive prices at the pump, officials said.
The major components of retail gasoline prices are the cost of crude oil, taxes, refining costs, and distribution and marketing costs, API officials said.
Of these, the price of crude oil has the largest impact – accounting for 56% of the cost.
“For this reason, price changes reflect the global cost of crude oil, which is influenced by current conditions and expectations of consumer demand, supply, inventory, geopolitical events and other factors. usually an effect on prices at the pump,” the organization mentioned in a fact sheet said.
In addition, federal, state, and local governments levy various taxes on transportation fuels.
The average national gasoline tax is 57.09 cents per gallon, including a federal tax of 18.4 cents per gallon and state level taxes ranging from 68.15 cents per gallon in California to 15.13 cents per gallon in Alaska.
API President and CEO Mike Sommers recently spoke of the critical importance of US energy leadership “in a time of geopolitical volatility and rising energy costs around the world.”
Sommers urged policymakers to advance U.S. natural gas and oil production to support stable global energy markets and ensure access to affordable and reliable energy for U.S. consumers and our allies. abroad.
“Almost everyone knows that the world is in dire need of oil and natural gas and will need it for decades or more; the only question is where will that oil and gas come from,” Sommers noted.
“More than ever, we need to seriously think about this economic truth and our energy future. It means recognizing the energy of natural gas and oil as America’s critical strategic asset.
“We can’t treat oil and natural gas as some sort of switch that’s on or off based on when,” Sommers continued.
“Production and delivery don’t work that way. Yet the prevailing policy of late has been to cancel pipelines, block permits and deny leases – all of which discourage investment.
“As more and more Americans face the consequences of bad policy, the elements of good policy become all the more apparent and desired. We have an opportunity together to refocus the discussion on energy with basic realities and common sense as a starting point.
Sommers called on the administration and Congress to develop a new five-year offshore leasing program; hold land leases on federal lands in accordance with the Mining Leasing Act; approve LNG export applications and authorize export approval to non-free trade agreement countries, and develop transparent and consistent authorization regulations to enable the development of vital energy infrastructure.
The United States has pledged to increase its LNG exports to Europe by 65% over the next six years.
How fast could US oil producers increase production to put downward pressure on domestic gasoline costs?
What could the federal government do to encourage this production?
API officials said it starts with accessing resources, advancing infrastructure, and enabling — rather than deterring — industry funding.
“It is important to note that financial markets have become less hospitable to the natural gas and oil industry, in part due to the positions, policies and signals of the Biden administration,” officials said. ‘API.
“Those with capital may be reluctant to invest in long-lived energy assets in such a climate, and a relatively fixed pool of cash flow that could be reinvested by industry has become increasingly scattered. .”
API has listed four “concrete actions” the organization believes the Biden-Harris administration could take immediately to support U.S. production.
They include completing federal lease sales, completing a new five-year federal offshore lease program, supporting energy infrastructure and reopening access to Alaska.
“The administration should reinstate the leases it suspended in Alaska’s Arctic National Wildlife Refuge and the development permit it approved in the National Petroleum Reserve,” API officials wrote.
“These were licensed with strict environmental standards and could prove to be an important source of domestic production over time.”
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