May 05, 2022
WASHINGTON, D.C. – U.S. Senator Angus King (I-Maine) today detailed the global factors that are contributing to rising costs for oil and gas for households and consumers nationwide. In a hearing of the Energy and Natural Resources Committee, Senator King explained how oil prices are driven by worldwide shifts in supply and demand, that in turn dictate the cost of gasoline – which is why there is no single solution or policy that can provide price relief at the pump.
“This has been a fascinating discussion, instead of mixing apples and oranges we’ve been mixing gas and oil. Let’s talk about them separately… oil is a global commodity. The price of oil is affected marginally by what’s going on in the U.S., but it’s affected by everything from Iran’s sanctions to Russia’s removal from the market to how oil is produced in Venezuela or Nigeria,” said Senator King. “It’s a worldwide commodity, it’s not something that we can set. The oil companies wake up in the morning and they look in the Wall Street Journal, if it says it’s $101 a barrel Brent Crude, that’s the price.”
“The high price of gasoline is a reflection of the high price of oil, and the high price of oil is a reflection of the global market. I was in Germany with Senator Marshall – I did the calculation, we drove by gas stations – they’re paying $8.50 a gallon, not $5.00, not $4.50. At that time it was almost exactly double the price in the United States,” Senator King continued. “So to blame President Biden or anybody else for the worldwide price of oil to the Keystone Pipeline is just nonsense. I think we really need to be clear about that – the high price of oil is a global price that’s high everywhere in the world, the inflation of gasoline is high everyplace in the world, and in fact in many places in the world it’s worse than here.”
Later in the hearing, Senator King was able to get a degree of certainty from the Energy Secretary when it came to the liquid natural gas market price structure, where the United States has more influence as the world’s largest LNG exporter. After explaining the importance of domestic natural gas, King asked Secretary of Energy Jennifer Granholm to evaluate all the data before making any long term natural gas export commitments that would drive up energy prices.
“Natural gas is not a global commodity, it’s a local commodity, the price has been very different here – it’s was about $3.50 here for a million BTUs and it was about $13 or $14 in China. That’s an advantage for the United States. We have now vastly increased the capacity for exports – supply and demand – we have dramatically increased the worldwide demand for our natural gas, we’re now the largest LNG exporters,” said Senator King. “I hope before you make more approvals of these long term commitments that you will have that data in hand.”
“For sure,” committed Secretary Granholm.
As a member of the Senate Energy and Natural Resources, Senator King has long been a fierce advocate for American energy independence and low costs for American consumers as we transition into our clean energy future. As energy prices rise in response to Russia’s invasion of Ukraine, King called on the White House to reevaluate exports in order to reduce domestic energy and heating costs, and has stressed the importance of energy efficiency for cheaper, cleaner power. He also recently urged U.S. energy companies to invest in production capacity and increase oil output instead of returning profits to shareholders.