NewslettersSign inAPP
spainSPAINargentinaARGENTINAchileCHILEcolombiaCOLOMBIAusaUSAmexicoMEXICOperuPERUlatin usaLATIN USAamericaAMERICA

Latest News

When will the drop in gas prices come in California? Dates of the ‘welcome relief’

Gas prices in California are reaching their near-record times from June, is any relief on the way?

Update:
Rancho Cucamonga, CA - October 04: Brenda Felton, from Rancho Cucamonga, removes a gas nozzle after filling up at a station on Milliken Avenue in Rancho Cucamonga on Tuesday, Oct. 4, 2022. The average price has risen 32 consecutive days, increasing $1.243, including seven-tenths of a cent Monday, according to figures from the AAA and Olil Price Information Service. Mondays increase was the smallest since a half-cent increase Sept. 19.(Photo by Will Lester/MediaNews Group/Inland Valley Daily Bulletin via Getty Images)
MediaNews Group/Inland Valley Daily Bulletin via Getty ImagesGetty

Oil production in the United States has yet to reach pre-pandemic levels, which contributed to the price crisis that took place earlier this year and which is beginning to rear its head once again.

Oil producers in the US have not increased production to compensate for the expanded demand, a result of embargos on Russian energy commodities being imposed across the world. With many countries banning the import of Russian oil and gas, demand for US energy commodities has risen. Crude oil exports, as a percentage of total crude oil production, have increased from seventy-five to eighty percent since last year, a trend that is likely to continue into the future.

Many companies have argued that they should be offered greater access to public land to drill and extract oil from to bring down prices. However, the fact that exports have increased so dramatically indicates that there are other reasons prices at the pump have surged over the last year.

In July, 298.9 barrels of oil were exported, up from 204.16 million barrels in February 2021, when they hit a low during the pandemic. Decreasing exports would bring down prices in the US, a step that could become critical as global demand increases and companies become incentivized to prioritize other markets.

Since the government has few options to limit exports, other actions must be taken to bring down prices or reduce reliance on fossil fuels.

OPEC to further limit global oil supply

These problems will only be exacerbated by the decision of OPEC members to lower their production in the coming months. At the most recent OPEC meeting in Vienna, the organization decided to “adjust downward 2 mb/d from the August 2022 required production levels, starting November 2022.”

Non-OPEC countries like China have also stopped processing crude oil at levels seen before the pandemic. Similarly to OPEC’s motivation, China may be making such a decision to keep prices high. The US is not really in a position to criticize the move by Beijing, considering that American oil companies have also limited production and brought in historic profits.

What could the US do to bring down prices?

Public ownership of energy companies to better control production to meet the needs of the country’s residents would be one way to undermine OPEC’s move to disrupt the global oil supply. Ownership that would allow for the collective distribution of benefits could prevent exports that jeopardize the financial health of households that are dependent on fossil fuels to get around and heat their homes. T

This is before we discuss the benefit of public ownership for the green energy transition, wherein profits could be reinvested in building out a cleaner energy system that does not fall victim to the whims of OPEC and how lawmakers and lobbyists feel in Washington.

Currently, the only real option President Biden has is to supplement losses by withdrawals from the national strategic reserves, but eventually, this will prove to be unsustainable.

The war in Ukraine and the subsequent energy crisis bring to light the fragility of the international energy system and extreme over-dependence on fossil fuels. As our fatal reliance on fossil fuels continues to perpetuate climate change, the threats caused by the fragility of energy markets to shocks must be taken seriously. Increasing production to offset raising costs is a short-sided solution that we will pay for in the decades to come.

Prices near record highs in California

In mid-June, gas prices in California averaged $6.36, and just last week, prices clocked in a dash lower at $6.31. With signs looking like prices are set to begin climbing across the country, drivers in the Golden States should be aware of a sudden surge.

Luckily for many, financial relief is on the way.

On 6 October, the state began sending Middle Class Tax Refund, and with benefits up to $1,050, it represents the “largest such program in state history.” After seeing a budget surplus, California will send more than $9.5 billion back to residents.

Payments will be made through direct deposit and by mail. The delivery date differs by mode of payment, but all those eligible can expect their checks by January.

As federal aid has run dry, poverty rates are sure to increase in the state as households grapple with historic price increases, particularly in energy and food commodities. The tax rebate is one of a variety of proposals to support the financial health of families across the state.

Governor Newsom proposes a windfall tax on oil and gas companies

As oil and gas prices increased in late September, the state government proposed a tax on windfall profits for these companies. Govenor Newsom noted that as global oil prices have gone down in recent weeks, gas prices in California have gone up.

“At the end of August, crude oil prices were roughly $100 per barrel, and the average gas price in California was $5.06; now, even though the price of oil has decreased to $85 per barrel, the average gas price at the pump has surged to $6.29,” read a press release from the Governor’s office. Over the last three months, oil companies have “raked in unprecedented profits on the backs of hard-working Californians” totalling around $100 billion.

Not many details on the potential windfall tax have been released, but the idea is that the funds collected would be redistributed to taxpayers next year.

Rules

To be able to comment you must be registered and logged in. Forgot password?