There are many reasons why gas prices could shoot up in the near future, but the Biden administration’s ban on oil drilling on millions of acres in Alaska in unlikely to be one of them.
The ban, announced on Wednesday, cancels seven Trump-era oil and gas leases in the Arctic National Wildlife Refuge and prevents drilling on more than 13 million acres in the federal National Petroleum Reserve in Alaska. President Joe Biden said his motivation for the bans was to protect and preserve the region in the face of climate change.
Given a limited amount of drilling was taking place there prior to the ban, there’s a slim chance consumers will feel more pain at the pump from this, said Patrick De Haan, head of petroleum analysis at GasBuddy.
“This is primarily about optics,” he said. Most oil companies didn’t bother bidding on the drilling leases in anticipation that they’d be canceled, he added. On top of which, many steered clear of the area because there wasn’t sufficient infrastructure. “There’s little power to drill, pipeline to carry the crude oil, roads and everything needed basically to drill for oil,” he told CNN.
The ban on drilling in the region would “not at all” hurt consumers in the future, De Haan said.
In contrast, oil production cuts in Russia and Saudi Arabia that were announced earlier this week are having immediate impacts, lifting Brent crude oil above $91 a barrel for the first time in 10 months. Brent crude is the international oil price benchmark and is produced in the North Sea.
Meanwhile, extreme summer heat has prevented many US refineries from operating at full capacity, leading to elevated gas prices throughout the peak driving season. Prices have come down slightly after Labor Day weekend. The national average for regular gasoline was $3.80 a gallon on Thursday compared to $3.83 a week prior, according to AAA data.
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