Too expensive to drive?

MYRNA BROWN, HOST: Coming up next on The World and Everything in It--perpetual pain at the pump.

New record highs for gas prices are becoming a near daily occurrence in the United States. The average price as of Wednesday $4.96 per gallon! That is up almost 30 cents from just one week ago, 64 cents from a month ago, and almost $2 dollars a gallon more than we were paying at this time last year!

PAUL BUTLER, HOST: So what’s driving the record high gas prices? And will we see sanity restored anytime soon? Joining us now to help answer those questions is Jack Spencer. He is an energy and environmental policy analyst and a senior research fellow at The Heritage Foundation. Jack, good morning!

SPENCER: Good morning, thank you for having me today.

BUTLER: Thanks for being here. Well, gas prices were already on their way up before the war in Ukraine. And I'll ask you about the other factors shortly. But why don't we start there? Clearly, we saw costs rise more sharply after the conflict began - gas was just a little over $3.60 per gallon in late February. So help us understand why this has impacted the oil and gas market as drastically as it has.

SPENCER: Sure, well anytime you have a geopolitical conflict like what you're seeing in Ukraine, we tend to see gas prices spike. That's not unusual. What makes this unusual or more difficult to recover from is that so many of the Biden administration policies have made it difficult for gas and oil markets to adjust. And that really, that's what we want to happen. So we see prices fluctuate in gas and oil markets all the time. And whenever you give, whenever policy allows for development and production to increase as prices increase, thereby adding supply into the marketplace and bring prices back down, that's what you want to happen. But that's not what we have now, because we have so many frictions, what I call frictions within the system. So you don't have any countervailing supply to come into the market that allows prices to moderate.

BUTLER: You mentioned President Biden, of course, he campaigned on moving America away from fossil fuels. In what ways have the Biden administration's energy policies affected gas prices?

SPENCER: A lot of ways. For one, things like renewable fuel standards and CAFE standards, and at the refinery level, they force the refineries to to do certain things that cause prices to increase. Those though, have been around for a while, and Biden supports those. Some things that are unique to the Biden's policies, though, are the broad anti and that it's the broad anti energy agenda that he supports. And what that causes is the gas and oil industry not to make the investments that they need to make in order to bring more supply into the marketplace. So when President Biden speaks out of one side of his mouth, as prices are rising about things like well, we're opening up leasing, we're doing this and doing that. It's really irrelevant almost, because out of the other side of his mouth, he's saying, well, we want to shut you down over the long term. And gas and oil production, just like any large industrial activity isn't something you just flip on and off with a switch - it takes large investments over years in order to maintain supply. Now, that being said, it's also true that oil markets are forward looking. So if President Biden said, you know, had an address this evening and said, Look, I was wrong about my war on conventional energy. We are truly going to open up supplies, we are truly going to push through the permits, we are truly going to do all of the pro energy things that heretofore I've stopped, then you would see prices come down rather quickly because energy markets would see future production coming online. And that would have an impact on gas prices very quickly.

BUTLER: Well, here's an impossible question for you to answer. I'm going to ask it anyway though. Any idea when we'll see prices come back down?

SPENCER: That is an impossible question to answer, but I'll give it a shot. I do think that we will eventually see prices moderate some because of the behavioral response from people to use less gas and oil. And that will result in a resettling of prices at a baseline that is likely lower than where it is now. You also will get in the near to mid term, additional production from producers around the world that will help ease some prices. Those though, will not be will not be long term and will contribute to that settling at a new baseline of what people can expect prices to be over time. So I don't know if that settling baseline price is going to be where it is today, a little bit higher or a little a lot higher, or a little bit lower. That I can't predict. But I think we will see a stabilization at some point that we can understand to be the new normal.

Now that, that being said, I don't think that's where we end up as a country. I don't think that what President Biden's trying to do is sustainable over time. And I don't think that people will stand for it. So I do think that given all of the energy resources we have in this country, given that our entire economy depends on them, and given the massive cost that it will wreak on the American public, if we stay on this path, that future politicians, maybe not President Biden will make the reforms necessary so that we can return gas and oil prices to a level that we're used to having.

BUTLER: We've been talking with Jack Spencer today. Jack thanks so much for your time this morning.

SPENCER: Thank you so much. I appreciate it.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.