Families and businesses across the Midwest will spend at least $29.2 billion more for gasoline and diesel over the following five years, with Michigan being particularly impacted, if Line 5 is shut down without a responsible alterative – The Line 5 Tunnel Project – in place.
Michigan families and businesses would spend a total of $1.8 billion to $2.2 billion a year more on gasoline and diesel should Line 5 be shut down, according to a study by the Consumers Energy Alliance. Overall, the closure could increase fuel prices 9.5% to 11.7% in the Midwest region of Ohio, Indiana, Pennsylvania and Michigan, if the fallout from prior disruptions to refineries due to natural disasters is any indication, the study found.
As energy prices continue their upward trajectory, CEA’s David Holt looks at how government regulations continue to discourage investment in a sustainable, clean energy future.
Government action to hammer an industry leads to lower levels of investment, which means less capital for innovations like carbon capture and sequestration. As new technologies come online and our infrastructure is built to adapt to them, we must maintain what actually keeps our homes heated or cooled and the lights on, while constantly ratcheting down emissions and improving our energy systems.
Michigan Laborers Business Manager Geno Alessandrini talks about CEA’s latest report on the impact shutting down Line 5 without an alternative in place. One of the consequences will be the loss of thousands of jobs across Michigan.
The Michigan Laborers District Council is an affiliation of seven local unions representing 13,000 Michigan workers. Those men and women are building Michigan’s future one project at a time, but the push from some to shut down the safe Line 5 pipeline threatens their good-paying jobs.
According to the new report from CEA, a shutdown would cost Michigan more than 6,600 jobs right away, $3 billion in economic activity, and tens of millions of dollars in tax revenue that funds our local schools and first responders.
WASHINGTON, D.C. – Consumer Energy Alliance (CEA), the leading energy and environmental advocate for families and businesses, issued the following statement regarding the House Committee on Energy & Commerce Oversight and Investigations subcommittee hearing on gas prices today. It is attributable to CEA Federal Affairs Adviser Michael Zehr.
“Political theatrics and blame-shifting cannot replace honest energy policy discussions that put the laws of supply and demand ahead of partisanship,” Zehr said.
“We applaud General H.R. McMaster for his testimony observing that energy security and environmental progress can be made together if we stop pursuing ‘non-solutions,’ namely unrealistic attempts to ram through energy policies without including all our options – renewable energy, natural gas and advanced nuclear – together in a way that keeps prices affordable.”
“Persisting with a circular firing squad approach to national energy security is the wrong path for American families, parents and small businesses suffering from high gas prices and inflation last seen in the 1980s.”
“Pointing at profits earned last year when 2022 prices are crushing Americans is a time-warp leap of logic only a science fiction movie should attempt. This kind of distortion is unhelpful, when Congress and the Administration should be acting fast on actual solutions to unleash domestic energy production, by re-starting Gulf of Mexico leasing, speeding up permitting for pipelines, LNG, and federal lands, and fast-tracking carbon capture rulemaking.”
“When political leaders are consistently antagonistic toward the most important energy resources used today and prices surge as a result, no one should pretend to be shocked. High oil and gasoline prices in America today are a direct result of policies imposed a year ago.”
“Today’s Groundhog Day hearing is like last year’s, except now some politicians are demanding increased production when last year they demanded less. Posturing doesn’t help families with their bills, and sticking to the same misguided energy policies that restrict production and investment while shopping blame around doesn’t bring prices down.”
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About Consumer Energy Alliance Consumer Energy Alliance (CEA) is the leading voice for sensible energy and environmental policies for consumers, bringing together families, farmers, small businesses, distributors, producers, and manufacturers to support America’s environmentally sustainable energy future. With more than 550,000 members nationwide, we are committed to leading the nation’s dialogue around energy, its critical role in the economy, and how it supports the vital supply chains for the families and businesses that depend on them. CEA works daily to encourage communities across the nation to seek sensible, realistic, and environmentally responsible solutions to meet our nation’s energy needs.
Shutting down the Line 5 pipeline would force families, businesses and industries in Michigan to pay more than $2.2 billion more for transportation fuel every year, according to an independent third-party analysis commissioned by Consumer Energy Alliance which was discussed in Bridge Michigan.
The report showed that if a shutdown occurred, Michiganders would have to pay more than $2.2 billion more in transportation fuel costs every single year. Gas prices are already skyrocketing, putting a heavy burden on Michigan residents and small businesses. The last thing we need is a shutdown of our key energy infrastructure causing us to pay billions more per year.
Small businesses are already working overtime to overcome inflation and staffing challenges during these difficult times. They don’t need to be burdened with additional costs that a Line 5 shutdown would bring too. Shutting down Line 5 would be disastrous for our economy, our small businesses and all of our residents.
Increases in the price of gasoline during the spring and summer months are typical. As we enter this time of year, we explain the factors that account for these annual price hikes to better educate energy consumers on gas pump prices in the United States.
Seasonal transition affects prices in spring
Gasoline prices in the spring and summer typically increase when the scheduled supply shifts to summer blends. Refiners operate on a May 1st deadline to switch production from a winter blend of gasoline to a summer blend of gasoline, commonly referred to as reformulated gasoline, which requires extensive maintenance and slowdowns in production to ensure refiners are separating out the different types of oil. Winter and summer blends are different as it pertains to their octane rating and the Reid vapor pressure (RVP).
The U.S. Environmental Protection Agency, as part of the Clean Air Act of 1990, requires refineries to supply cleaner-burning fuel in major metropolitan areas to order to reduce smog and ozone pollution during the hotter summer months as gasoline can evaporate too quickly. Based on pressure and temperatures, depending on where the gasoline is going, the fuel blend could change. This is meant to reduce pollution in cities based on their annual summer high temperatures. So Minnesota’s blend might have a higher psi than say, Arizona.
Summer blends are also more expensive because they contain less butane. Reformulated gasoline is also more expensive to refine at about 2 to 4 cents per gallon, and is less efficient than the blend of its winter counterpart. This means that drivers burn more gas to travel the same number of miles – all things being equal with vehicle maintenance – which creates increased demand for oil and moves market prices up.
Global demand is increasing
International demand for petroleum plays a significant role, as 70% of the cost of a gallon of regular gasoline last month was attributed to the cost that refiners paid for a barrel of crude oil. Global demand for oil is projected to increase in large part due to the strengthening economies of newly industrialized nations around the world.
Political events influence pricing
Because crude oil is a traded commodity in international markets, its price per barrel is subject to a number of factors, including geopolitical events and developments in the countries where oil is abundantly produced, such as Russia, Venezuela, and the Middle East. Continued developments in these oil-producing regions could continue to influence an increase in the price of a barrel of oil. Even if tensions in Russia and the Ukraine decrease, the Houti conflict in Yemen could spur new market uneasiness. That is why across the news you’ve likely heard of increasing production here at home on Federal Lands and from more stable energy producers – notably Canada – that could help prevent prices from spiking in response to events in Ukraine and Yemen in the future.
Year-round factors in addition to supply and demand affect prices. For example, refiners must account for their overhead and profits, as do distributors and retailers. And there are, of course, federal and state excise taxes. In Februrary, taxes accounted for 14%, or nearly 50 cents for every gallon of regular gasoline dispensed in consumers’ tanks, according to the U.S. Energy Information Administration (EIA).
The good news
Domestic production of oil and natural gas here at home can help keep energy prices relatively stable in the long-term, as more of these developed energy resources are introduced to national and regional energy markets. This growth is one of many reasons why CEA supports an “all-of-the-above” energy policy strategy that supports American jobs, creates economic opportunities and protects American energy consumers.
Yesterday the Biden Administration announced plans to release a million barrels of petroleum a day from the Strategic Petroleum Reserve for the next six months in an attempt to lower rising energy costs. However, the move raised eyebrows and sparked questions by energy experts who shared that releasing what amounts to barely 5% of our daily consumption won’t result in a substantial decrease in prices, if at all.
The White House would have you believe that the 180 million barrels of oil President Biden ordered released from the Strategic Petroleum Reserve (SPR) is a big deal.
Prices at your local gas station are calling MA-LAR-KEY on that!
Here’s why. The 180 million barrels of oil is a little more than nine days of U.S. daily oil consumption. We consumed an average of 19.8 million barrels a day in 2021, according to government data.
Now, let’s put that in a global context, which is how the markets view it.
The world consumes about 86 million barrels of oil a day, which means that’s not even enough for two days.
Just like before, the markets moved downward on the news of another SPR release. Time will tell, but prices trended upward after the other two.
Unfortunately, the whole exercise is a day late and a dollar short – because even though President Biden bragged about a “record” release, it’s still a drop in the global oil bucket.
After the first release in November of 2021 (long before the war), and now with this latest release, we will have drained our reserves of more than 242 million barrels – roughly one-third of the SPR – in the last five months. Notably, not for any real emergency other than falling poll numbers. Spokeswoman Psaki will have you believe that the Administration is doing everything it can, yet it still hasn’t restarted Federal Lease sales and continues to scare investors from funding oil and gas projects.
At this pace, we’ll drain the SPR by the beginning of 2023. Then what? With production down in the U.S. and White House efforts afoot to keep it that way, how will we meet demand and refill the SPR for the next crisis?
For a picture of what America would look like after its oil and gas industry is hobbled, just look to Germany or the UK, which pursued impractical carbon reduction programs that heaped huge prices on increasingly angry voters. Then evaluate what they pay per kilowatt hour – a number that even inflation might find aghast.
The Ukraine invasion demonstrated just how vulnerable that made their national security and economies, and the White House wants Americans to willingly follow that path. There’s a bigger disconnect here than between a head and a guillotine.
A third SPR release is tripling down on the same bad bet again, and it’s gambling with our money, our economy, and our national security. A bad bet is a bad bet, and the house always wins.
The easy answer is here. It’s time to open up Federal Leasing. This last year has shown Americans why an inclusive energy policy led by conservation, efficiency, and new technology is the way to help the environment and the people here in the United States and abroad.
Want to learn more about the Strategic Petroleum Reserve, where and why it started? Click here.
Watch here as Jen Psaki claims the Administration is doing all it can as they continue to ignore Federal Leasing.
As companies look toward the technologies that will lead America to a cleaner energy future, CO2 pipelines which allow for carbon sequestration and utilization are one of the most important options available to America’s manufacturers. However, some activist groups would rather remove options for companies to lower their emissions footprint.
Another industry group, the Consumer Energy Alliance, criticized the PST in a news releasefor involving Bold Alliance.The environmental group, best known for fighting the Keystone XL pipeline, helped fund the consultant’s report accompanying PST’s call for more regulation.
WASHINGTON, D.C. – David Holt, President of Consumer Energy Alliance(CEA), the leading energy and environmental advocate for families and businesses, issued the following statement in response to the Biden Administration’s announcement of a plan to release a million barrels of oil a day from the Strategic Petroleum Reserve over the next six months.
“While we appreciate the Administration’s recognition that the world and our economy needs more American oil and gas, emptying our strategic storehouse while hobbling the production needed to replace it is just doubling down on the wrong decision. Across all demographics, 60% of Americansview more domestic oil and gas drilling and production as the fastest way to lower record gasoline prices – it is surprising the Administration does not share that view.”
“This SPR release is like selling all the bread in the bakery, switching off the baker’s oven and telling wheat farmers their crop isn’t welcome anymore,” Holt said. “All that will buy you is trouble and higher prices down the road. Americans are not fooled; releasing what amounts to barely 5% of our daily consumption while impeding the most environmentally sensible oil and gas production in the world needed to meet our daily demand will only prolong the pain we are all feeling at the gas pump or grocery store.”
“It’s long past time for the White House to level with the public, instead of blaming the high energy prices on Putin or oil and gas companies when they well know that gasoline rose by more than a dollar in the first 10 months of the Biden presidency due to a production moratorium and regulatory obstacles. They should stop saying there is nothing standing in the way of production, while they continue to stand in the way in word and deed.”
“If nothing is standing in the way, why is there even a debate? Biden should be doing all he can to reduce prices, including listening to the industry that is able to really help, and seeking real ways to meet demand, increase U.S. supplies and lower prices. Finding ways to argue about domestic energy development is not an effective use of the White House’s time, nor Americans’ money.”
“SPR releases may offer relief for a few days at most, but the long-term price trend has continued upward or stayed level, and the White House’s antagonism toward real energy solutions remains in place. Now on its third SPR announcement, you’d figure the White House may have learned.”
“Using Band-Aids like the one announced today by the Biden Administration in an energy crisis that is hurting hundreds of millions of Americans every day is not a solution. We strongly urge the Biden Administration to utilize the many domestic resources they have available to increase American oil and gas production at a level that will actually help lower prices and alleviate the burden that has been plaguing consumers for far too long. None of this will slow down our march toward a more diversified energy economy. And none of this will impair our world-leading ability to continue to lower emissions. But it will help Americans everywhere.”
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About Consumer Energy Alliance Consumer Energy Alliance (CEA) is the leading voice for sensible energy and environmental policies for consumers, bringing together families, farmers, small businesses, distributors, producers, and manufacturers to support America’s environmentally sustainable energy future. With more than 550,000 members nationwide, we are committed to leading the nation’s dialogue around energy, its critical role in the economy, and how it supports the vital supply chains for the families and businesses that depend on them. CEA works daily to encourage communities across the nation to seek sensible, realistic, and environmentally responsible solutions to meet our nation’s energy needs.
Just like before, the markets moved downward on the news of another SPR release. Time will tell, but prices trended upward after the other two.
