LTE: Who is responsible?

Editor, Gettysburg Times,

Has anyone seen any “NO GAS TODAY” signs at gas stations during this rise in oil and gas prices following the national economic shutdown in the spring of 2020? No, there has always been gas. It just costs more. Chief executive officers of United States oil producing companies have stated on multiple occasions that prices are determined by supply. What happens to the law of supply and demand if the supplier restricts the supply?

According to the http://www.eia.gov website, there were 397,250,000 barrels of crude oil produced in the United States in March 2020. The month Joe Biden was inaugurated 342,700,000 barrels were produced. Oil production in August 2022 was over 371,000,000 barrels per month, which was 26,250,000 barrels less than what was produced in March 2020.

Though oil producers say they are pumping all they can, production is still down over 850,000 barrels per day (BPD) than it was before the shutdown. Why are oil wells that produced 26,250,000 barrels of crude oil in March 2020 not producing oil today? Neither the Keystone XL Pipeline nor government leases delayed by the Biden administration in 2021 were producing oil in March 2020.

On Oct. 5, with the price of oil falling, the OPEC+ countries (including Saudi Arabia and Russia) announced a cut in oil production of 2,000,000 BPD starting November 2022 to stabilize energy markets (otherwise known as increasing the commodity price). Following this announcement, stations raised the price for gas sitting in their storage tanks as fast as the signs could be changed.

This most recent production cut was proceeded by the largest/longest OPEC+ crude oil production adjustments. Starting May 1, 2020, and continuing through June 30, 2020, production was cut by 9,700,000 BPD. For the next six months through 2020, the production cut was 7,700,000 BPD.

On May 1, 2020, at the beginning of production cuts, the price of a barrel of oil was $19.72. On June 30, 2020, at end of the initial period, the price was $39.27. On Dec. 31, 2020, at the end of the next six-month period, the price was $48.35. By the beginning of the Ukraine War in February 2022 the price was $91.68. The energy market appears to have stabilized.

Who is more responsible for the current high price of oil and gas: oil producers who withheld product from the market to enrich themselves or President Biden who signed executive orders that have had no influence on oil production levels still not at March 2020 levels?

Gregory Lupp,
Biglerville