There are big reasons why the gas prices are soaring. Just hear what oil and gas companies are saying. For one, Chevron CEO Mike Wirth said in a recent interview that he does not believe another oil refinery will be built again in the United States, saying that government policies are a key reason why, as average gas prices continue to rise as of Tuesday.
“There hasn’t been a refinery built in this country since the 1970s,” Wirth said during Bernstein’s Strategic Decisions Conference on June 1 when asked about more refining being added in the Gulf of Mexico. “I personally don’t believe there will be a new petroleum refinery ever built in this country again.”
Wirth added: “Capacity is added by de-bottlenecking existing units by investing in existing refineries … but what we’ve seen over the last two years are shutdowns. We’ve seen refineries closed. We’ve seen units come down. We’ve seen refineries being repurposed to become bio refineries. And we live in a world where the policy, the stated policy of the U.S. government is to reduce demand for the products that refiners produce.”
Two: because of the “environmental activism” from Biden, Wirth said that the federal government’s current policy is to reduce the demand for oil, making it “very hard” in a company “where investments have a payout period of a decade or more.”
Data released by automotive club AAA, the average price for a gallon of gasoline stands at $5.01 per gallon nationwide, with California leading the way at $6.40 per gallon.
Gas prices were already climbing in 2021 amid higher demand and reduced supply. Last year, the Biden administration signed several executive orders to limit new oil drilling on federal lands, directing federal agencies to eliminate fossil fuel subsidies, and ending construction of the Keystone XL pipeline.
Three: The oil supply crunch has been exacerbated by Western sanctions that were imposed on Russia, a major exporter, after its invasion of Ukraine.
In response, the Biden administration has released 180 million barrels of oil from the Strategic Petroleum Reserve over a 6-month period starting in March.
Wirth told the conference that the oil industry has “raised our Permian [Basin] production growth outlook to 15 percent this year,” adding that the “narrative you hear that the industry is not growing production is not true. We are growing production and our industry is growing production.”
