We learn the principles of supply and demand in high school. It is my forecast that gas will approach $4 as COVID-19 recovery occurs in 2021 as citizens get the vaccine and feel safe to travel. There will be more demand for gas during the normal summer travel, schools re-opening means school buses will need gas, workers will start driving more as less telework needed and airlines will need gas as people start traveling again. Businesses will pass their increased costs on to the consumers and inflation will start.
In the early 2000s, we were paying close to $4 a gallon for gas. As an Air Force pilot, I flew a short notice White House directed mission that involved flying then-U.S. Secretary of Energy Samuel Bodman to Riyadh, in the Kingdom of Saudi Arabia. The secretary of energy had to ask, beg, face-to-face for King Salman bin Abdulaziz Al Saud to increase the country’s oil supply to meet the high demand and lower the cost of gas at the pump.
King Salman has since aged and passed power to his son known as MBS. The Trump administration understood the world’s supply and demand and had the U.S. on a path of energy independence with less reliance on foreign oil.
In 2020, the Trump administration sanctioned Saudi Arabia officials on the killing of a journalist in their Turkey Embassy. Within eight weeks, the current Biden administration’s foreign and domestic policies have re-punished and verbally reprimanded the Kingdom of Saudi Arabia and Crown Prince MBS, canceled the Keystone pipeline delivering U.S. oil to refineries and paused the fracking of oil on federal property, all which affect the supply.
The basic demand signal for gas in 2021/2022 will only rise in the U.S.A. and world as the COVID-19 recovery occurs with school buses, airlines and cars using more gas.
Last week, the Kingdom of Saudi Arabia did not increase its oil output at the OPEC meeting. KSA has the second largest oil reserves, and I do not foresee any Biden administration White House directed mission to have tea with the KSA Crown Prince MSB to ask, beg, for increased oil output after being verbally reprimanded on the world stage. We are not going to get oil from Venezuela, which has the largest reserves, as the U.S. has sanctioned that dictator. U.S.’s internal supply will be low due to lack of fracking and pipeline infrastructure. The end state is $4 gas followed by inflation due to the high gas prices, which businesses will make up by increasing their price of consumer goods. Someone lacks knowledge of supply and demand and are adjusting foreign and domestic policies rapidly during a world emergency which is a poor decision.
If you read the Biden administration’s unclassified Interim National Security Strategy just released this month, you will learn we are not going back to 20 years or 4 years ago, so long $2.35 gas as the new normal will be $4 to pay for everything as the strategy should be labeled National Socialist Strategy. We will pay financially in 2021 and 2022 and then someone will say we are all victims and try to blame someone and confuse us on how this all started then say the climate caused it.
Doug Sayers, La Plata