The steady rise in oil and gas prices shows no sign of slowing down. This week, West Texas Intermediate crude surpassed $81 a barrel for the first time since 2014. Accordingly, the Texas average gas price rose seven cents to $2.93 per gallon, also a seven-year high. Some analysts are now projecting oil will hit $90 a barrel by year's end.
Karr Ingham, oil economist with the Texas Alliance of Energy Producers, says the rapid recovery of demand coming out of the pandemic somewhat caught the industry off-guard. "Early last year, it all shut down...operators had to shut down wells and quit drilling wells because demand had cratered," he tells KTRH. "Now, demand is getting pretty close to coming back to pre-pandemic levels, but it's taking production a little bit longer to come back."
Ingham has seen cycles like this before, where prices show a marked increase. "That always signals a shortage of supply relative to current demand, and the best solution to that is just to add to supply," he says. "But you've got governmental policies that are working against that outcome right now."
Indeed, the Biden administration has stifled domestic oil production through actions like cancelling the Keystone XL oil pipeline and restricting new oil and gas exploration on federal lands, while at the same time Biden begs OPEC to increase oil production. "This Congress and this White House are openly hostile to U.S. domestic crude oil and natural gas development and production, for reasons that are somewhat confounding to me," says Ingham.
With the federal government's boot still on the neck of energy producers, Ingham predicts the current supply problem will persist. "Worst of all, it's killing consumers," he says. "Because prices are rising for gasoline, for electricity, for home heating, and for other end-use energy products."