ast month, several senators
called on the Biden administration to take action to lower energy costs. Specifically, they urged the administration to increase supply of natural gas and home heating oil by limiting natural gas exports and releasing inventory from the Strategic Petroleum Reserve (SPR).
The senators are right to call for this. As they note, the outlook for the coming winter heating season is looking increasingly grim for consumers. Rapidly increasing demand for energy is continuing to outpace supply as the economy recovers from the pandemic, and energy prices for home heating — as well as gasoline for transportation — are going up across the board.
The US Energy Information Administration (EIA) has forecast that home heating costs for families using natural gas could increase by up to 30% this winter as compared to last winter’s heating season, a change from $573 to $746. For those using home heating oil this winter, costs could increase by as much as 43%, from $1,210 to $1,734. Gasoline prices have already gone up to $3.41 a gallon, $1.31 more per gallon since last year. Bank of America recently predicted that the price of crude oil, which drives the price of gasoline, could go up another 45% by June of next year.
Luckily, as the senators note, the administration has the option to release oil from the SPR, the federal stockpile of petroleum that mitigates against future supply disruptions. It was established in 1975 after the Arab oil embargo of 1973-74, which caused the average price of imported crude oil to triple. Releasing oil from the SPR could help to lower gas prices and heating oil costs. And suspending natural gas exports could reduce pressure on natural gas prices in the US.
While these efforts alone might not be sufficient to significantly reduce prices, taken as whole, they will send a strong signal to the markets that the administration is serious about addressing high energy prices.
The President has pressured OPEC and Russia to increase oil supply beyond already agreed upon targets, saying that the rise in gasoline prices was “a consequence” of Russia and OPEC nations refusing to pump more oil. His efforts have been unsuccessful, but he should not let up the pressure. Increased production would help to reduce the price of crude oil and thereby take pressure off of gasoline and heating oil prices.
Climate activists have criticized calls for increased production because they want to significantly reduce the use of fossil fuels. Reducing the country’s dependence on fossil fuels is an important long-term goal, but no climate change policy implemented today will help lower the cost next month for families that need to drive to work and keep their homes warm this winter. The short-term impact of rising prices falls hardest on lower-income families who are more likely to be frontline workers and have fewer options to save money on gasoline because they cannot work from home.
In the long term, we need to increase the energy efficiency of the residential sector to reduce demand for fossil fuels, especially for low-income families who struggle to pay their energy bills and cannot afford home energy efficiency upgrades. For these families, Congress should increase funding for the Weatherization Assistance Program (WAP) to improve the energy eff…