The withdrawals have sent the nation’s strategic reserve to its lowest level since 1984 in what the administration called a “bridge” until domestic production could be increased.
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The alliance of oil-exporting countries on Wednesday decided to sharply cut production to support sagging oil prices, a move that could deal the struggling global economy another blow and raise politically sensitive pump prices for U.S. drivers just ahead of elections.
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The release of reserves in the U.S. could create pressures that could reduce oil prices, though Biden has already twice ordered releases from the strategic reserves without causing a meaningful shift in oil markets.
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Oil prices soared early Monday before retreating. Benchmark U.S. crude surged to $130 a barrel overnight, then moderated to around $119, a 3% gain, in afternoon trading. The international price skyrocketed to $139 before falling back to about $123 a barrel.
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The new fee is intended to encourage industry to adopt best practices that reduce emissions of methane—the primary component of natural gas—and thereby avoid paying.
The Chevron-Hess deal comes less than two weeks after Exxon Mobil said that it would acquire Pioneer Natural Resources for about $60 billion.
It’s a rare feat for an established company to nearly double its revenue in one year—from $1.3 billion in 2021 to nearly $2.2 billion in 2022. That revenue ranked the company as Indiana’s sixth largest private company, according to IBJ research.
The Saudi cut of 1 million barrels per day, to start in July, comes as the other OPEC+ producers agreed to extend earlier production cuts through next year.
Less oil flowing to refineries should mean higher gasoline prices for drivers and could boost the inflation hitting the United States and Europe.
The cuts total up to 1.15 million barrels per day from May until the end of the year, a move that could raise prices worldwide.
From the U.S. to Brazil and Indonesia, governments are embracing energy made from plants like soybeans or canola, or even animal fat, to move away from fossil fuels and cut emissions.
The supplemental rule comes as President Biden has accused oil companies of “war profiteering” and raised the possibility of imposing a windfall tax on energy companies if they don’t boost domestic production.
The production cut threatens a global economy already destabilized by the Ukraine conflict and risks saddling Biden and Democrats with newly rising gasoline prices just ahead of the U.S. midterm elections.
The refinery produces about 435,000 barrels per day and provides about 20% to 25% of the refined gasoline, jet fuel, and diesel used by Illinois, Indiana, Michigan, and Wisconsin.
While the Inflation Reduction Act concentrates on clean energy incentives that could drastically reduce overall U.S. emissions, it also buoys oil and gas interests by mandating leasing of vast areas of public lands and off the nation’s coasts.
The breakthrough spending deal reached by Sens. Joe Manchin and Chuck Schumer would commit a historic $370 billion to combat climate change, but it comes at a cost that some green activists are finding impossible to accept.
President Joe Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume.
A White House desperate to bring down gas prices is having little success persuading refinery owners to expand operations, and more closures are imminent.
The American Petroleum Institute, which represents the industry, said in a statement that capacity has been diminished as the Biden administration has sought to move away from fossil fuels as part of its climate change agenda.
Todd Borgmann, Calumet’s former CFO, was promoted to CEO effective this week. The move, and several other executive-level changes, were triggered by the May 1 retirement of board chairman Fred Fehsenfeld.
Obstacles to more U.S. oil are surmountable, according to analysts, yet will take months to work through and it could be late this year or early next before a significant production increase materializes.
A further round of talks between Russian and Ukrainian officials on Monday will focus on discussing a potential ceasefire with an immediate withdrawal of troops and security guarantees, Ukraine negotiator Mykhailo Podolyak said.
Economists say the one-two punch of rising prices and the intensifying geopolitical crisis could put the brakes on the rapid rebound and raise the risks of recession.
The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday, rising by 10 cents in one day, and up 55 cents since last week, according to auto club AAA.
