Diesel Prices Jump 37% in 10 Weeks, Gas Prices Projected to Hit $6.20 by August

The White House is considering waiving U.S. gasoline environmental rules aimed at reducing summertime smog, hoping the waiver will combat rising pump prices.

Retailers are required to sell summer-blend gas from June 1 to September 15. In the past, the U.S. government has waived those requirements regionally or nationally to deal with hurricanes or other supply issues. The Biden administration has already lifted the restriction on summer sales of E15. The waiver under consideration would apply to all grades of gasoline.

"These pollutants have severe impacts on public health and would likely exacerbate the inequity in air quality that communities already bear,” activist green groups, including Friends of the Earth, National Wildlife Federation and Sierra Club, wrote to EPA Administrator Michael Regan after learning of the policy being considered. The “potential savings from this measure are limited, while the climate impacts are irreversible. Solutions to oil price hikes lie elsewhere.”

This comes as gas prices are at record highs — compared to the $2.17 average price of a gallon in January 2020 — and one J.P. Morgan analyst predicted prices could reach $6.20 per gallon by August.    

Diesel Dilemma 

U.S. average retail prices for ultra-low-sulfur diesel rose more than 37% in just 10 weeks after Russia’s invasion of Ukraine, setting a new nominal record of $5.62 a gallon in the week ended May 9, according to the U.S. Energy Information Administration.

The Biden administration is also considering a release of diesel fuel from federal reserves to address surging prices and the threat of supply outages on the East Coast.

Possible rebate for high gas prices? Democrats floated the idea of a $500 rebate to combat gas prices. Americans would receive a $500 cash rebate under legislation being introduced by Democratic Representatives Sean Casten (IL), Don McEachin (VA) and Earl Blumenauer (OR) that would be paid for by eliminating tax subsidies for the fossil fuel industry.

Meanwhile, the International Energy Agency (IEA) says governments around the world need to do more to spur faster growth in electric vehicles.  “Electric-car sales continue to break records, but mineral supply constraints are looming,” the IEA said in its latest EV outlook. “Much more needs to be done to support charging infrastructure and heavy-duty vehicles.”

The agency suggested officials ease bottlenecks for battery materials, enhance support for EV purchases and take action to kickstart the market for heavy-duty electric vehicles. Such efforts may help reach their goal of a 350 million global EV fleet. As it stands now, EVs aren’t selling fast enough for the world to have a realistic chance of avoiding the worst impacts of climate change.

Editor’s Take:

Putting a band-aid on a huge wound is not the answer. Everyone is frustrated and searching for a solution. Simply implementing temporary waivers or using up our strategic reserves, will unlikely be a very satisfactory policy response and in turn will render us more vulnerable as a nation. A mass movement to electric vehicles might be an acceptable long-term solution, but moving in the direction too quickly only further exposes our weak policies when it comes to energy. Ultimately, EV’s could be a long-term goal, but wouldn’t it make sense to build the supporting infrastructure ahead of time or even simultaneously versus overtaxing an already struggling electrical grid? Wind and solar can contribute, but can they push us to where we need to be? Not until technology catches up, which could take decades! So, what can be done until such time as electric or hydrogen solutions are fully operational? Fossil fuels. We have supplies if we put policies in place that allow us to fully utilize them. That old adage of no pain-no gain, really isn’t necessary in the case of energy. A comprehensive energy policy would probably be embraced by most people in the U.S. - and even the world. Let’s put common sense back into the equation and move to a future that is viable and sustainable, but without the unnecessary interim pain at the pump!