The current administration is trying to present to the public that the current rise in gas prices is random, uncontrollable, a fluke of nature, or just plain old gambling — no different than playing a game of Sloto. Is that really true?
So let’s take a trip down memory lane and try to figure out what is the truth and what is a game.
What is the history of gas prices?
Actually, when you are talking about the price of gas, it is actually based on the price of crude oil, plus the cost to refine the crude oil, plus any additional taxes local, state, and federal taxes the government adds on.
From Nasdaq crude oil prices from 1870 – present (price on contemporary dollars)
- 1870 – $3.64
- 1880 – $0.86
- 1890 – $0.94
- 1900 – $1.29
- 1910 – $0.70
- 1920 – $2.01
- 1930 – $1.27
- 1940 – $1.02
- 1950 – $1.78
- 1960 -$2.08
- 1970 – $23.72
- 1973, July – $22.80
- 1973, October – Oil Embargo
- 1974, March – End of Oil Embargo, the price of oil had risen nearly 300%, from US$3 per barrel ($19/m3) to nearly $12 per barrel ($75/m3) globally
- 1974, May – $59.02
- 1978, November – Strike of Iranian oil workers
- 1980, Iran – Iraq war
- 1980, June – $135.52
- 1980 – $119.45
- 1990 – $28.48
- 2000 – $26.72
- 2010 – $91.38
- 2015 – $37.13
- 2016 – $53.75
- 2017 – $60.46
- 2018 – $45.15
- 2019 – $61.14
- 2020 – $48.52
- 2021 – $75.21
- 2022 – $99.27
1973 – 1974 Oil Embargo
Source: History.state.gov
During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations. Arab OPEC members also extended the embargo to other countries that supported Israel including the Netherlands, Portugal, and South Africa. The embargo both banned petroleum exports to the targeted nations and introduced cuts in oil production. Several years of negotiations between oil-producing nations and oil companies had already destabilized a decades-old pricing system, which exacerbated the embargo’s effects.
The embargo laid bare one of the foremost challenges confronting U.S. policy in the Middle East, that of balancing the contradictory demands of unflinching support for Israel and the preservation of close ties to the Arab oil-producing monarchies. The strains on U.S. bilateral relations with Saudi Arabia revealed the difficulty of reconciling those demands. The U.S. response to the events of 1973–1974 also clarified the need to reconcile U.S. support for Israel to counterbalance Soviet influence in the Arab world with both foreign and domestic economic policies.
Once the broader impact of these factors set in throughout the United States, it triggered new measures beyond the April and November 1973 efforts that focused on energy conservation and development of domestic energy sources. These measures included the creation of the Strategic Petroleum Reserve, a national 55-mile-per-hour speed limit on U.S. highways, and later, President Gerald R. Ford’s administration’s imposition of fuel economy standards. It also prompted the creation of the International Energy Agency proposed by Kissinger.
Iranian hostage crisis, 1979 and Iran-Iraq War, 1980 – 1988
Source: History.state.gov
In the wake of a successful revolution by Islamic fundamentalists against the pro-American Shah of Iran, the United States became an object of virulent criticism and the U.S. Embassy in Tehran was a visible target. On November 4, 1979, Iranian students seized the embassy and detained more than 50 Americans, ranging from the Chargé d’Affaires to the most junior members of the staff, as hostages. The Iranians held the American diplomats hostage for 444 days.
In 1979, Soviet-supported Marxist rebels made strong gains in Ethiopia, Angola, and Mozambique. Vietnam fought a successful border war with China and took over Cambodia from the murderous Khmer Rouge. And, in late 1979, the Soviet Union invaded Afghanistan to support its shaky Marxist government.
How did these events in the 1970s affect alternative oil research?
Source: History.com
Americans worried little about a dwindling supply or a spike in prices, and were encouraged in this attitude by policymakers in Washington, who believed that Arab oil exporters couldn’t afford to lose the revenue from the U.S. market. These assumptions were demolished in 1973, when an oil embargo imposed by members of the Organization of Arab Petroleum Exporting Countries (OAPEC) led to fuel shortages and sky-high prices throughout much of the decade.
The embargo and limitations on oil production continued, sparking an international energy crisis. As it turned out, Washington’s earlier assumption that an oil boycott for political reasons would hurt the Persian Gulf financially turned out to be wrong, as the increased price per barrel of oil more than made up for the reduced production.
In the three frenzied months after the embargo was announced, the price of oil shot from $3 per barrel to $12. After decades of abundant supply and growing consumption, Americans now faced price hikes and fuel shortages, causing lines to form at gasoline stations around the country. Local, state and national leaders called for measures to conserve energy, asking gas stations to close on Sundays and homeowners to refrain from putting up holiday lights on their houses. In addition to causing major problems in the lives of consumers, the energy crisis was a huge blow to the American automotive industry, which had for decades turned out bigger and bigger cars and would now be outpaced by Japanese manufacturers producing smaller and more fuel-efficient models.
The oil embargo was lifted in March 1974, but oil prices remained high, and the effects of the energy crisis lingered throughout the decade. In addition to price controls and gasoline rationing, a national speed limit was imposed and daylight saving time was adopted year-round for the period of 1974-75. Environmentalism reached new heights during the crisis, and became a motivating force behind policymaking in Washington. Various acts of legislation during the 1970s sought to redefine America’s relationship to fossil fuels and other sources of energy, from the Emergency Petroleum Allocation Act (passed by Congress in November 1973, at the height of the oil panic) to the Energy Policy and Conservation Act of 1975 and the creation of the Department of Energy in 1977.
As part of the movement toward energy reform, efforts were made to stimulate domestic oil production as well as to reduce American dependence on fossil fuels and find alternative sources of power, including renewable energy sources such as solar or wind power, as well as nuclear power. However, after oil prices collapsed in the mid-1980s and prices dropped to more moderate levels, domestic oil production fell once more, while progress toward energy efficiency slowed and foreign imports increased.
When politicians and most historians know is that when oil prices are high, government and regular American citizens have a desire to reduce energy consumption, have energy independence, and do research into renewable energy options. When the price of oil drops, there are fewer incentives to reduce energy consumption, don’t care where the energy comes from, and does not have a desire to invest in research into alternative energy.
60 Minutes Interview with Barack Obama
Barack Obama: The 60 Minutes Interviews Introduced with new commentary by Steve Kroft
That is audio of all of Barack Obama’s interviews from 60 minutes. Obama’s first interview with 60 minutes after being President of United States was on March 22, 2009, Season 41, Episode 24.
In this interview, Barack Obama talked about two notable items (paraphrasing):
- Obama believed that if the price of oil was higher ($5.00 per gallon), than it would encourage more research and development of alternative energy options. He was basing this on what happened during the 1970s when due to the Oil Embargo, research and development into alternative energy options increased. When the price of oil went back down, that research went away.
- By having two “entities” balancing each other out, it does not allow any one “entity” from becoming too powerful. In other words, the United States needs another world power to balance it out, for example, China or Russia.
21 January 2021, Biden cancels Keystone XL pipeline
Source: reuters.com
Biden said that he had to cancel the pipeline project due to “climate change”.
“The pipeline was to carry millions of gallons of oil from Canada to refineries in the US. Along with the project cancellation, the executive order revokes oil and gas development at national wildlife monuments. “
“Approved by Canadian regulators in 2010, the project was blocked by former US President Barack Obama in 2015, who said the benefits of the pipeline would have too heavily favored Canada while producing additional greenhouse gas emissions.”
“For Canadians, we are talking about $100 billion in [annual] exports,” from the pipeline, Alberta Premier Jason Kenney told the Agence France-Presse news agency. “So this is a matter that touches on Canada’s vital economic interests.”
“Obama’s successor, President Donald Trump, later reversed the decision, issuing a presidential permit for the project in 2017. Operations were due to begin in 2023.”
People were against the project because they were afraid of oil spills. On the flip side, others have said that transporting the same oil using trucks and trains had a higher risk of oil spills.
October 2021 House Oversight and Reform Committee
Source: https://freebeacon.com/politics/how-dems-helped-spike-gas-prices/
“In late October, the House Oversight and Reform Committee called in the CEOs of Exxon, BP, Shell, and Chevron to explain what steps they are taking to produce less oil and gas, with Rep. Hank Johnson (D., Ga.) alleging that “the world can’t wait” any longer. At the time, gas prices were hovering around a 10-year high.”
“Some Democrats, such as Rep. Ro Khanna (Calif.), have demanded that domestic oil companies dramatically curtail their domestic operations.
In one exchange during the October hearing, Khanna pressed Shell president Gretchen Watkins on whether she agreed that “under the Paris agreement that … we need to have oil and gas production declining every year.” After she answered that the company believes “that hydrocarbon demand needs to reduce if we’re going to get to net zero [emissions] by 2050,” Khanna demanded to know whether Shell will decrease its production by 2 percent each year, a figure initially offered by the company in 2019.”
“In light of the invasion of Ukraine, Rep. Khanna called on President Biden to release oil from the Strategic Petroleum Reserve to bring down the price of gas and supports oil companies increasing production at existing facilities in the short term,” a Khanna spokeswoman told the Washington Free Beacon. “In the long term, he believes we need a moonshot to develop renewable energy sources to prevent similar situations from happening in the future and have a more diversified energy source.”
November 10, 2021, oil companies will not ramp up production of oil
Source: lite.cnn.com
“Pressure from socially conscious investors hit a crescendo earlier this year when activist investors won board seats at ExxonMobil (XOM), “
“When much of the energy industry was focused on whether President Joe Biden would intervene in energy markets, Exxon CEO Darren Woods released a statement detailing how his company is investing $15 billion over the next six years to develop a “lower-carbon future.” That includes spending on reducing emissions in heavy industry and power generation, developing carbon capture and storage and researching hydrogen and biofuels. ” This is exactly what Obama and Biden had hoped would happen if the price of gasoline went high enough.
“Governments around the world are setting ambitious targets for cutting emissions. Biden has set a goal of cutting carbon emissions by as much as 52% by 2030, rolled out new methane regulations and returned the United States to the Paris climate agreement. ” “US oil companies are cashing in on high prices. “
“Unlike in OPEC nations, oil production is set by private enterprise and the free market, not government leaders. “
“Normally, the best cure for high prices is high prices, which incentivize more supply. And yet, even though US oil prices have surged by more than 65% this year, US oil production is about 14% below the levels of the end of 2019, before Covid erupted. “
What was the plan?
My personal analysis (opinion).
The Democrat’s plan was simple. They were going to force the price of oil to get higher, so that would encourage investment in alternative energy. If they were the only ones controlling the variables, the plan may have worked. But as Murphy said, “Anything that can go wrong, will go wrong, at the wrong time.”
Russia invading Ukraine, and the Ukrainian people not surrendering was the unanticipated variable in their grand plan.
24 February 2022, Russia invades Ukraine
America and the rest of the world call for boycotts of Russian oil.
8 March 2022, Biden boycotts Russian oil
To say another famous quote, “The world plans, and God laughs”.