What to know about gas prices, what's driving up the price, and a future threat lurking therein.

[Nevilledog]

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1/32 What to know about gas prices, what's driving up the price, and a future threat lurking therein

What to know about gas prices, what's driving up the price, and a future threat lurking therein
A look at supply, demand, historic pricing, profits, oil industry surveys, and earnings calls, shows production and inflation don't explain the prices. The answer reveals a future economic threat.
https://novelscience.substack.com/p/what-to-know-about-gas-prices-whats?sd=pf

2/32 Prices mostly follow supply and demand but not right now. The most popular comparison, particularly among partisans right now, is one between Memorial Day 2020 and Memorial Day 2022.
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3/32 Unemployment was 15% in 2020 so no jobs + COVID = lower demand for gas. Today unemployment is 3.5%, but it's not really a fair comparison. Thus, boasting about the price in 2020 is a little like saying "LOOK HOW LOW THE PRICES WERE DURING THE GREAT DEPRESSION." Weird flex.
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4/32 The two dates are a dramatic comparison precisely because they aren’t comparable, but if we do use 2020 data, then we must use it in all circumstances. Be consistent or you're just making/consuming propaganda.

The US unemployment rate was unchanged at 3.6 percent in May of 2022, the same as in the previous two months, remaining the lowest since February 2020 and compared with market expectations of 3.5 perc…
https://tradingeconomics.com/united-states/unemployment-rate

5/32 In the interest of an honest comparison, in 2019, the high price hovered around $4/gallon on Memorial Day (DiChristopher, 2019). Let's look at some more comparable situations insofar as the price per barrel. It was around $120 on June 10.
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6/32 In 1981, the adjusted price per barrel broke $125, while the adjusted peak gas price was around $4.30, like in 2008 (McMahon, 2022; US Official Inflation Data, 2022).
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7/32 In 2008, the adjusted-for-inflation peak price per gallon was around $4.30 but the price per barrel had an adjusted price of $187.04 hoaxlines.notion.site/Something-some….
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Notion – The all-in-one workspace for your notes, tasks, wikis, and databases.
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https://hoaxlines.notion.site/Something-something-gas-prices-9ed6ebcf30574703b7885d8f620a7ad6#:~:text=Figure%204.2.%20%20Crude,price%20of%20%24187.04

8/32 In 2012 the adjusted price per barrel broke $133. The inflation-adjusted gas price in the same period was around $4.40.
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9/32 This demonstrates that the pricing increases are greater than they have been, historically, although production under Biden and Trump has been higher than in previous decades.
docs.google.com/spreadsheets/d…
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Oil and gas price data - June 12, 2022 - for Hoaxlines blog post
Oil and Gas Price Data Field Production of Crude Oil (Thousand Barrels),
Link to chart
https://docs.google.com/spreadsheets/d/1mvULvVFu6fklAljgi1Bxg3V8u962t-Mama8kc3mxOdg/edit#gid=1962963008&range=J37:M45

10/32 While the war will frustrate some supply chains, America got less than 2% of its oil supply from Russia, and to encourage supply, the Biden administration has issued more permits on federal lands than in the previous administration’s first 3 years.

Biden claimed 9,000 oil drilling permits are unused. That’s true, but all work can’t begin ‘right now’
There are more than 9,000 permits to drill oil on federal lands, as President Biden claimed. But a variety of factors are keeping that work from getting started.
https://www.verifythis.com/article/news/verify/national-verify/oil-permits-9000-unused-fact-check/536-2a657e09-856b-436c-a55d-df1cdf2acb3f

11/32 Not everyone was happy about that btw.

Biden Promised To End New Drilling On Federal Land, But Approvals Are Up
New permits for companies to extract oil and gas from U.S. public lands are on pace to hit their highest level since George W. Bush was in office, undermining the president's ambitious climate goals.
https://www.npr.org/2021/07/13/1015581092/biden-promised-to-end-new-drilling-on-federal-land-but-approvals-are-up

12/32 In May of 2022, the House passed the Gas Price Gouging Prevention Act in a 217-207 vote. All Republicans and four Democrats opposed it (Daly, 2022).

https://www.congress.gov/bill/117th-congress/senate-bill/3920/quote

13/32 A supermajority of Americans supported the bill, Price Gouging Prevention Act remains stalled in the Senate and unproved by its Republican members. Effectively, we have Senators who are both condemning gas prices and ensuring they remain high.

As Democrats Push Price-Gouging Bill, Voters Show Bipartisan Support for Legislation That Would Bar Companies From Charging Excessively High Energy Prices
About 3 in 4 voters also support gas tax holidays as average prices hit record highs
https://morningconsult.com/2022/05/25/gas-price-measures-survey/

14/32 Morning Consult found that energy price-gouging legislation is supported by 77% of registered voters, including 83% of Democrats and 76% of Republicans (Martinez, 2022). morningconsult.com/2022/05/25/gas…
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As Democrats Push Price-Gouging Bill, Voters Show Bipartisan Support for Legislation That Would Bar Companies From Charging Excessively High Energy Prices
About 3 in 4 voters also support gas tax holidays as average prices hit record highs
https://morningconsult.com/2022/05/25/gas-price-measures-survey/

15/32 What does the oil industry say is the cause? A survey of 132 oil and gas firms shows the biggest restraint on increasing supply is investor pressure. About 60% of respondents answered that“investor pressure to maintain capital discipline." dallasfed.org/research/surve…
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Oil and Gas Expansion Accelerates as Outlooks Improve Significantly
Activity in the oil and gas sector accelerated in first quarter 2022, according to oil and gas executives responding to the Dallas Fed Energy Survey.
https://www.dallasfed.org/research/surveys/des/2022/2201

16/32 Just 6% of oil executives reported to the Dallas Federal reserve said government regulations were the primary reason they were not increasing production.

17/32 Critically the Dallas Federal Bank survey notes:

It is looking unlikely that (increased supply) will happen, which will result in sustained higher energy prices until the American consumer is pushed into a recession.

Oil and Gas Expansion Accelerates as Outlooks Improve Significantly
Activity in the oil and gas sector accelerated in first quarter 2022, according to oil and gas executives responding to the Dallas Fed Energy Survey.
https://www.dallasfed.org/research/surveys/des/2022/2201

18/32 Where is all this extra cash going? Buybacks, of course. Many companies that will spend this price-gouging cash flow on buybacks also spent their tax breaks on buybacks after 2017.

https://www.ft.com/content/2852b800-4a03-4cf6-a47f-65c306a22657

19/32 Here’s why that matters.
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20/32 Taxes for corporations were slashed from 35% to around 20% citing economic benefits. Penn Wharton, widely regarded as the best business school in the country, said of the effects of the 2017 cuts:

The Tax Cuts and Jobs Act: Extending Changes to Individual Taxes — Penn Wharton Budget Model
PWBM previously analyzed the effects of the tax bill passed this December. Most of that bill’s tax cuts for individuals (non-businesses) expire at year-end 2025. This brief reports the bu…
https://budgetmodel.wharton.upenn.edu/issues/2018/4/11/the-tax-cuts-and-jobs-act-extending-changes-to-individual-taxes

21/32 "By 2040, we project that GDP contracts by 0.6 percent to 0.9 percent relative to current law, where the tax cuts for individuals are set to expire. Debt increases between $5.2 trillion and $6.1 trillion."

The Tax Cuts and Jobs Act: Extending Changes to Individual Taxes — Penn Wharton Budget Model
PWBM previously analyzed the effects of the tax bill passed this December. Most of that bill’s tax cuts for individuals (non-businesses) expire at year-end 2025. This brief reports the bu…
https://budgetmodel.wharton.upenn.edu/issues/2018/4/11/the-tax-cuts-and-jobs-act-extending-changes-to-individual-taxes

22/32 Two major surges in stock buybacks put the US economy at risk by “rendering these businesses more financially fragile in subsequent downturns when abundant profits disappear."

Why Stock Buybacks Are Dangerous for the Economy
Even as the United States continues to experience its longest economic expansion since World War II, concern is growing that soaring corporate debt will make the economy susceptible to a contraction t…
https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy

23/32 Should that happen, it’s likely the middle class will again, be forced to bail out these same businesses now extracting from the American public writ large. bailoutwatch.org/analysis/fossi…

Fossil fuels received an $8.2 billion tax bailout and slashed nearly 60,000 jobs last year
Fossil fuels are not the necessary engine of employment their boosters claim. They collect billions in coronavirus tax subsidies last year while laying off thousands of workers
https://bailoutwatch.org/analysis/fossil-fuel-firmsslashed-nearly-60000-jobs-in-2020

The Stock-Buyback Swindle
American corporations are spending trillions of dollars to repurchase their own stock. The practice is enriching CEOs—at the expense of everyone else.
https://www.theatlantic.com/magazine/archive/2019/08/the-stock-buyback-swindle/592774/

24/32 Many companies have admitted to choosing not to increase supply to keep profits high. Examples are included below. Where possible the audio from the call or interview has been included so you can hear it from the executives directly.

What to know about gas prices, what's driving up the price, and a future threat lurking therein
A look at supply, demand, historic pricing, profits, oil industry surveys, and earnings calls, shows production and inflation don't explain the prices. The answer reveals a future economic threat.
https://novelscience.substack.com/p/what-to-know-about-gas-prices-whats?s=w#%C2%A7companies-are-intentionally-keeping-prices-high

25/32 Companies indicating they intend to keep prices high include Halliburton, Marathon Oil, Pioneer Natural Resources, Occidental Petroleum, Diamondback Energy, Devon Energy, Laredo Petroleum, APA Corporation, Hess Corporation, and EOG Resources.

What to know about gas prices, what's driving up the price, and a future threat lurking therein
A look at supply, demand, historic pricing, profits, oil industry surveys, and earnings calls, shows production and inflation don't explain the prices. The answer reveals a future economic threat.
https://novelscience.substack.com/p/what-to-know-about-gas-prices-whats?s=w#%C2%A7companies-are-intentionally-keeping-prices-high

26/32 As discussed above, only 6% of oil executives polled cited environmental policies as restricting supply. Some companies indicate they aren’t going to risk lowering profits by increasing supply. Others said there was no need to increase supply.

Oil giants reap record profits as war rages in Ukraine, energy prices soar: Here's how much they made
Profits for Exxon Mobil, Shell, Chevron and more rose by billions in the first quarter – despite costs from war in Ukraine and soaring energy prices.
https://www.usatoday.com/story/money/economy/2022/05/07/oil-company-record-profits-2022/9686761002/
27/32

28/32 These companies, larger and more powerful than many nations, are plundering us while we are struggling and are lying to us about why they must increase costs.

29/32 They do it all while they endanger our economy by weakening it, using the war and the current President as cover for this extraction. It's terrible yes, but what comes next is worse.

Fossil fuels received an $8.2 billion tax bailout and slashed nearly 60,000 jobs last year
Fossil fuels are not the necessary engine of employment their boosters claim. They collect billions in coronavirus tax subsidies last year while laying off thousands of workers
https://bailoutwatch.org/analysis/fossil-fuel-firmsslashed-nearly-60000-jobs-in-2020#:~:text=Fossil%20Fuel%20Firms%20Slashed%20Nearly%2060%2C000%20Jobs%20In%202020%20While%20Pocketing%20%248.2%20Billion%20Tax%20Bailout

30/32 Reiterating this quote from Dallas Federal Bank (Plante & Patel, 2022):

It is looking unlikely that (increased supply) will happen, which will result in sustained higher energy prices until the American consumer is pushed into a recession.

Oil and Gas Expansion Accelerates as Outlooks Improve Significantly
Activity in the oil and gas sector accelerated in first quarter 2022, according to oil and gas executives responding to the Dallas Fed Energy Survey.
https://www.dallasfed.org/research/surveys/des/2022/2201

31/32 At that point, I think we rightly fear that they will ask us to save them yet again.

32/32 That's what you should know about gas prices.

What to know about gas prices, what's driving up the price, and a future threat lurking therein
A look at supply, demand, historic pricing, profits, oil industry surveys, and earnings calls, shows production and inflation don't explain the prices. The answer reveals a future economic threat.
https://novelscience.substack.com/p/what-to-know-about-gas-prices-whats?s=w#%C2%A7prices-mostly-follow-supply-and-demand-but-not-right-now
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[Alexander Of Assyria]

1. Corporate greed. Condensed version.

[Gidney N Cloyd]

2. Great info-- I'm bookmarking this.

[SheltieLover]

3. Kicking for visibility

Ty!