Do cold facts matter these days, or is it just a question of who provides the answers that people want to hear? The comment can apply to several, if not many, of today’s political issues. But it is particularly appropriate for the discussion about the factors behind high gasoline prices and what should be done about them.
Put simply, the White House likes to blame oil companies for high prices, and the oil industry says the circumstances — the war in Ukraine, OPEC, etc. — are beyond its control. The Biden administration’s suggestion that oil companies should make some sort of sacrifice because of the crisis is not appreciated. (A version of this tension is observable in many other industrialized countries as well.)
A breakdown and explanation of the key factors for the non-expert goes like this:
Oil prices: There are minor differences of price between different sorts of oil, depending on its quality, and how much it needs to be refined. But there is essentially one price across the world, reflecting the fact that oil can be transported easily by pipeline or tanker from where it is produced, across the world to where it is refined and sold. That price shot up because of disruption and uncertainty after the Russian invasion of Ukraine.
Refineries: Capacity to refine oil into its range of possible products, which includes gasoline, is currently strained by a lack of capacity. Indeed, a few weeks ago, Saudi Arabian officials were briefing that the kingdom didn’t need to produce more oil because increased prices were caused by refinery shortages and not lack of production. But, politica …