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June 20, 2022

What Policies Would Help Bring Down Energy Prices?

Last week, President Joe Biden called on oil companies to produce more gasoline and reduce profits in order to bring down fuel prices for consumers and businesses. In a letter to the executives of seven energy companies, the president even alleged these companies are refining less gas in order to push up prices and increase their profits.

The letter is part of a wider strategy. Additionally, U.S. Energy Secretary Jennifer Granholm is expected to host an emergency meeting this week with refining executives. Secretary Granholm will discuss the steps the Biden administration believes the companies can take to increase refining capacity and output and reduce gas prices in the near-term.

According to news reports, President Biden also could consider invoking emergency powers to increase refinery capacity and output in the near term.

In response to the president’s letter, the companies said they cannot easily increase capacity; indeed, U.S. refiners say they are operating at near-peak production.

According to Politico, the companies are right. The bottleneck comes from plant closures over the past three years that reduced U.S. oil processing capacity to 17.9 million barrels a day now from 18.9 million during the first half of 2020. Expanding a plant’s capacity to produce more gasoline, diesel, or other fuels can take years — and hinges on certain policy changes. Specifically, the energy companies said the Biden administration could promote investment through “clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines.”

Unfortunately, as Politico also reported, environmental groups have sued the Biden administration to challenge about 3,500 drilling permits approved for companies seeking to develop energy from federal land.

To learn more about what policies are needed to increase energy production in the United States, check out this post from the Energy Equipment and Infrastructure Alliance.

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