Who Caused Energy Inflation?

Right now partisans are blaming Biden policies for reducing US oil supply causing high prices. Is this true? Here's US Oil Production:

Source: ARC Energy Charts dated 6/13/2022

Today, production is at its highest level since the mid-2020 lockdown price collapse. We have yet to recover to pre-pandemic levels but production has been rising for the last two years. 

What about demand, is US demand way up?

Source: ARC Energy Charts dated 6/13/2022

Well, we've recovered from lockdowns but US demand looks pretty stable to me. Probably demand SHOULD be higher and is holding back the US recovery. But in fact, this is not demand pull inflation. And this is the conundrum facing US policy makers. US energy policy is NOT the cause of the fantastic rise in energy prices.  What IS the culprit?

Other headlines have blamed US refineries for lower production.

Source: U.S. Energy Information Administration

Refinery production has hardly changed, if anything, its slightly higher for the last few weeks! It's not that. Its not refineries. 

Conclusions

We have to face that US, and maybe world, supply and demand, production and consumption, is NOT the culprit. The Sherlock Holmes maxim "when you have excluded the impossible, whatever remains must be the truth" begs the question, what remains?

First acknowledge inflation is NOT solely a US problem. Its WORLD prices that are rising. While we haven't excluded every possible explanation, the costs and complexity of the global energy value chain remains. Shipping, transport, storage, that is, supply chain disruptions may be the source of today's energy price inflation. The policies and causes of today's disruptions, mainly, pandemic and war, are topics for other posts.

Why ARC Energy Charts? They are industry standard energy information sources with better graphics than US Energy Information data. Both sources are easily accessible by anybody. Sources are available upon request. 

Disclaimer: Posts are for education only, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors. Send request to gdrahal@outlook.com to follow this blog and for additional information. 

© 2022 George Rahal