It is a fact that the U.S. oil and natural gas industry has long fought for and, in the past decade, finally secured the release of the federal government’s restrictions, which restricted exports. The main reason for this was the “shale revolution” in the nation’s gas and oil fields. It was expected that the United States would have plenty of gas and oil to sell.
The main reason for this was because the industry of oil and gas wanted the same thing that almost all other sectors within America have: the right to market their products to the highest bidders regardless of where they resided around the world.
This meant it was likely that U.S. consumers would be impacted if U.S. prices rose to be in line with global prices. In addition, energy prices affect all who have a vote and are always politically significant.
It is not surprising that, with U.S. regular gasoline costs exceeding $5 per gallon, The president Joe Biden lashed out at U.S. oil companies–which have had one of their most profitable years ever–saying that they must increase the production of refined products from oil. The companies have replied that their refineries are operating at a high capacity; therefore, there is nothing they can do short-term.
What isn’t said is that it’s long been the norm in the United States to allow the export of refined (as opposed to crude oil) petroleum products, such as gasoline or diesel, as well as heating oil. The nation has a refinery capacity that is significantly higher than domestic demands and thus exports a significant amount of refined products, which includes around one million barrels per hour (mbpd) in gasoline, and 1.4 Mbpd of diesel as well as heating oils (for the week that ended June 10). If there were a need for the U.S. to curtail exports of this kind to cut costs at home, the nation would violate its long-term commitments to market and trade and could reduce production and thus increase prices for foreign customers.
The explosion of U.S. natural gas exports has also caused strain on U.S. domestic natural gas supply, causing prices to drop to be lower than $2 for a thousand cubic feet (mcf) two years ago to around $7 per million cubic feet today. (That’s less than $9 recently.) That’s led to sharply increasing prices for industrial and residential heating, as well as for natural gas-based plastics as well as chemicals, including nitrogen fertilizer that is derived from natural gas.
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The booming demand for L.N.G. liquefied (L.N.G.) exports is now sending approximately eleven percent of U.S. natural gas production out of the country (based on exports between January and the month of March in 2022). The number of L.N.G. exports increased by 50 percent between 2011 and 2021.
The advocates of free trade worldwide have been insisting for a long time that all commodities must be traded globally and sold at the highest price. They were also of the opinion that the government’s policies shouldn’t favor or aid one sector over the other. The concept was formulated around 1992 when Michael Boskin, chair of the White House Council of Economic Advisors under President George Bush, when Boskin was asked if there was a need for the United States should have a policy that encouraged local semiconductor production. Boskin is believed to have replied, “Potato chips, computer chips, what’s an actual difference?”
Today, the nation is discussing precisely the same concerns. Do this mean that the United States needs an industrial policy for semiconductors? Do you think to be the United States curtail oil exports? A debate about the export of natural gas is expected to begin soon.
It’s been discovered that it is imperative the country that produces chip chips made of potatoes or computers. Following the conflict between Ukraine and Russia that has led to the abrupt breakdown and painful reshaping of the world’s trading system, all over the world are struggling with shortages of fuel, food, and essential industrial products, including semiconductors.
If countries increasingly determine that self-sufficiency and affordable import prices of domestic products can be more significant than free trade, expect numerous more debates on whether or not governments should become more active in establishing industrial policies and determining what can be exported and what cannot.