National Budget Short on Cash as Price of Gas Surges to

Taxpayers do not want to pay the price of “Trumpgas,” and it’s becoming clear they won’t be for much longer either. Gasoline prices nationwide have surged close to $3 per gallon over the past…

National Budget Short on Cash as Price of Gas Surges to

Taxpayers do not want to pay the price of “Trumpgas,” and it’s becoming clear they won’t be for much longer either.

Gasoline prices nationwide have surged close to $3 per gallon over the past month, having risen an average of 50 cents since Labor Day. Meanwhile, oil prices have fallen more than 10 percent in price since mid-October.

Economists have warned for months about a sudden jump in oil production from the United States that was an expected result of the decision to lift restrictions on oil drilling. On the other hand, low oil prices were expected to encourage more production and therefore drive prices down in the near term.

Related Image Expand / Contract This truck at the Atlanta Hightop distribution center is filled with fuel. The hub unloads gas and diesel to eight million gallons a day. (Jack Tran/Atlanta Journal-Constitution via AP)

But the past two weeks alone have proved the forecast was wrong.

Recent data from the Department of Energy have shown a steady increase in U.S. oil production, and prices at the pump have now doubled since March.

The unintended consequence? At a time when the national budget has been short on funds for natural disasters, much of which, at times, has been paid for by the Strategic Petroleum Reserve, the federal government is reportedly now looking to tap into its oil reserve to offset the costs of other natural disasters.

Related Image Expand / Contract The U.S. strategic petroleum reserve is one of the largest refineries in the world, standing at about 770 million barrels. (U.S. Department of Energy)

“This is not a good thing,” said Matthew Barreto, an associate professor of political science at Stanford University who co-authored a report on energy policies and energy policy in the U.S. from 2001 to 2014. “The United States has no natural disaster budget.”

Barreto stressed that Congress has a variety of tools available for addressing fuel prices, including the Strategic Petroleum Reserve, which is estimated to have about 650 million barrels in storage.

“In terms of keeping the pressure on gasoline prices, tapping the strategic petroleum reserve is a pretty discretionary act,” Barreto said. “It could have serious effects on gasoline prices, but may not be the most effective thing to do.

“If you assume there is a 1 percent chance of the strategic petroleum reserve being tapped, that is nearly an act of war against American energy,” he added.

Officials from the U.S. Department of Energy could not be reached for comment.

Ray Dugan, managing director of energy research at Wells Fargo Securities, agrees tapping the strategic petroleum reserve can add to gas prices in the short term. But he points out that the increase in domestic oil production is more likely to boost prices in the long term.

“Clearly, demand has improved,” Dugan said. “Retail gasoline is being held down by oil imports and Western European refineries that are returning from downtime. At some point, we’ll have to import less gasoline and refineries are still recovering from hurricanes.”

President Trump has already acknowledged the problem.

In a tweet, he wrote: “Just learned that Oil prices have hit an all-time high of $71.98 per barrel,” a level not seen since February 2014.

Related Image Expand / Contract In the wake of Hurricanes Harvey and Irma, the Strategic Petroleum Reserve has come under more scrutiny. (University of Maryland/Marvin Grant)

It should be noted that oil prices have fallen in recent days. On Thursday, they fell as low as $70.20 per barrel, a level unseen since October 2014.

But Dugan said that increase isn’t entirely to blame for the jump in the price of gasoline.

“Crude oil is held in several crude oil inventories, including stockpiles at the Cushing, Oklahoma, hub, and barges at the Gulf of Mexico,” he said. “When inventories declined in the first two weeks of November, prices had been on the rise.”

The first three weeks of November proved to be the best ever month for U.S. oil production, averaging nearly 9.1 million barrels per day. That was up by 750,000 barrels per day since October, when American oil production dipped to 8.97 million barrels per day.

That’s the highest October production level since 1980. However, oil production still remains shy of the record highs of over 10 million barrels per day reached in 1970.

Additionally, more oil drilling offshore of the Gulf of Mexico were

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