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anything. >> c-span is provided by comcast and these other trftion providers, giving you a front row seat to democracy. who has n gasoline markets since the 1990's. let's begin with a question that you always get when people are paying more at the pump. why. guest: it's a good question, john. thanks for having me on today. the basic answer is, demand for refined products is outstripping supply for refined products. backing up a bit though, to 2020, just explaining what happened, briefly, when the coronavirus first hit. especially earlier in the year. a really big and sudden drop in demand, 20 million barrels per day, possibly more, in global

demand. over a very short amount of time , it was a very sudden, much more deeper drop than people had expected. that was between just say january and april of that year. as you can imagine, fewer people are driving, they aren't flying as much. and then, you know, as a result of that oil companies, refiners start slashing runs, there's no reason for them to keep producing jet -- gasoline and diesel, jet fuel, fewer people are using it. producers start cutting spending and production. again, where are you going to put the crude? they start filling up inventories as refiners are not going to process the crude. so now we are at a point where we have recovered to some extent. but, the refinery runs haven't really kept pace with the

increase in demand. so for instance, plats analytics sees demand rising i think for the first 10 months of the year, january to october of this year, it's all global demand rise 8 million barrels per day, but over the same time, refinery runs increase maybe 2 million barrels per day to maybe 78 billion barrels per day. you have this gap and the tightness is still in the refined product. like in the united states, for instance, the inventories of gasoline and diesel are below the five-year average levels. now the five-year average can be skewed because last year inventories were still high, right? still a fairly good indicator to show that inventories are still fairly tight, relative to, relative to the demand right now

and that's what's causing the price to increase. host: and a snapshot of the end result here, this is from the aaa gas map, the average price of gasoline today, $3.41 a gallon. you can see viewers on this map, the darkest red states are where the average price is somewhere between $3.61 and four dollars $.68. -- $4.68. and so on down the line of where prices are the highest in the country. with those rising prices, questions in the white house briefing room about what the biden administration is going to do about it. here's a clip with jen psaki from yesterday. [video clip] >> republicans criticizing the administrations big picture. can't claim the keystone pipeline, neutral leases on

federal land, saying that the administration writ large has increased gas prices. what's your response? 3 one, -- >> one, we haven't canceled existing. i know that you know that. not new leases. to be clear, i know it has been a criticism, that's why i said that, not an accurate one. rising prices over the long-term makes it a stronger case for doubling down the investment and focus on clean energy options so that we are not lying on the fluctuations of opec and their willingness to put more supply and meet the demand of the market. that's our view. but we also feel there are a number of actors here, including price gouging, where we have concerns and we have asked the fcc to look into the need for opec to release more that is a larger issue here and that is why we have been focused on those options. host: that was jen psaki, from

friday. having this discussion there, bringing up opec and price gouging. the roles they are playing in your mind. guest: well, opec definitely plans to increase production to now 400,000 barrels per day until the end of next year. now in october they increase production by 480,000 barrels per day. but they are being cautious. and i think other producers are being cautious, to, and that's something i want to stress here. opec is saying look, we can only boost production as much as refiners need. right? if there isn't enough refinery capacity coming online, than there's really no need for us to boost production because where the the crude going to go?

it either gets refined or put into storage in the way the market is structured right now, putting crude into storage doesn't really make you any money. there's no financial incentive to put crude and storage right now. so, i get the point of view, when you think of the independent oil producers as well, like outside of opec, right, they are doing the same thing. even more so. they are saying look, we can increase production a little bit that we want to stay within certain targets. we have promised our shareholders that we are going to tighten down on production growth because we don't want to flood the market with too much oil at a time where there are still a lot of questions about the coronavirus, right? waves of record daily levels in germany, recently, and an increase in kreis -- cases in

china, so there's still a lot of concern there, like how do we recover without putting too much oil on the market. and repeating, you know, at least a little bit of what we saw in 2020. so i think that's a real concern. but the interesting thing is i think we will see refinery runs increase. gasoline prices on the futures market have risen, you know, over the last several months or years. but in recent days, over the last couple of weeks, i noticed they came down a bit and maybe there is something to that. i think part of it is concern around coronavirus cases but i think also you see some refining capacity returning, you know, in the u.s. refinery runs were kept fairly low in recent months, you

know, for one reason, because of hurricane activity that shut down some gulf coast refineries. those are now coming back. i think they were kind of stagnant, 14 million to 15 marion barrels a day, now expected to rise, up to 16 million barrels a day this month . and globally the iea came out today and said they see global refinery runs climbing something like 3.5 million barrels per day over the next couple of months. so, what that will do is increase the supply of gasoline and diesel onto the market. again, there is so much, it really depends on what demand does over the next couple of months, right? more people driving and flying

because of the holidays? it's hard to tell. business travel is still way down and i don't think that's expected to recover to pre-covid levels for two or three years. more people traveling for the holidays, a lot of it depends on that. how much are people going to be out shopping and eating, so on and so forth. host: if you want to talk gas and oil prices, jeff mower is a great guy to do it with. eastern and central time zones, 202, --(202) 748-8001 (202) . guest: we assess around the world. so, the division i work for is the oil division.

i marriage the americas news division. but we report on, you know, gasoline, crude, metals, natural gas, you name it. just agriculture around the world. we also assess prices around the world, which is something where, you know, our expertise really comes in handy here because we have a really good insight into specific markets around the world. it's not just reporting on a futures benchmark. in the case of oil, right, it's not just the ice brent futures or the nymex light sweet crude futures. it's reporting on all the different grades of crude traded around the world every day, all the different grades of gasoline and the different locations, the different grades. the real fascinating thing about

that is that you really see the complexity of it. you really get an idea of the, for instance, yesterday i was reading a story about how expensive light sweet crude is in northwest europe, right? and how many more imports, how that's pulling more imports of u.s. crude into that region. you wouldn't necessarily see that just by looking at futures markets, but you see it by looking at these individual markets around the world. another great example would be, say, refining margins around the world. how profitable certain refineries are when they run certain types of crude through their plants. host: and for the viewers that want to take it out -- check it out, sp global.com. got a lot of calls lined up for you.

john, montgomery, independent. what's your question for jeff mower? caller: the root -- the common republican lie about oil prices is that we were energy independent for the past five viewers. my question to you mr. mower is, during any point in the last five years has the united states ever produced more oil than they consumed? that's number one. number two is, do we have the capacity in america to produce enough oil to overcome the effect of opec on the global price of oil? thank you. guest: yeah, those are very good questions. the united states did become a net crude exporter, i think it was last year. again, i don't remember all of it. but the united states exports a lot of crude. i think crude exports last week

were something like 4 million barrels a day but lately it's been like 3 million barrels per day and then the united states also exports a lot of refined products. gasoline and diesel. mexico is a big buyer of refined products. other countries in south america are big buyers of refined products from the u.s. so whether or not we could produce so much, well let me think about that. i think you could, because it is a global market, no. i don't know what that would take. because it's a global market, you are shipping crude to locations that need it and like i said, exporting light sweet crude or heavy crude to europe and asia, you are competing with, you can compete with opec, in other words, in these regions, and that helps to have that supply, that helps to bring down the price or it can help.

i'm not sure if that answers your question. but i think the main point i want to make is that you know, it's this global market and when any country is able to export and access that, it helps to compete with other refiners around the world and can help bring prices down. host: indianapolis, indiana, stephen. caller: i had two questions. the first is independent. how is it that trump was able to persuade americans that we were oil independent? we are not oil dependent. that's my first question. my second question has to do with capitalism. the first lesson we learned in elementary school is that when the demand is great, the ice is greater.

right now there is a demand for oil so the price is greater. why is it that the democrats are afraid to come out and say it? we are not socialist, but capitalism is at work at this time, which is creating these problems. host: mr. mower? caller: so the first question again -- guest: so the first question again i think has to do with trade flows. the united states was more independent, you know, as the u.s. increased crude production. right? but it was a certain type of crude that was being produced mostly that wasn't really geared up with refiners in the gulf coast or midwest weren't really geared up to run that. they were geared up for heavier, more sour crude. it made sense to export the

light crude. imports have gone to the midwest. even in the gulf it's minimal. a lot of that has come from an increase in canadian imports competing with saudi and mexican crude. that has really helped to drive some of those waterborne imports out. like yeah, there's more north american independence. 3 million to 4 million barrels per day imported into the u.s.. host: what's the difference between sweet and sour crude?

guest: it's a sulfur rating. hey lighter, sweeter crude, it's easier to produce for the lower sulfur products that are in demand. for entry -- for instance like ultra low sulfur diesel. in europe, when you think about it, they are very dependent on diesel. light, sweet crude's are very much in the high demand there. host: northport, new york. you are next. guest: -- caller: november, 2020, there was a fresh crash in the oil. at the time i think saudi arabia and russia for a while had been pushing down the price of oil to undermine the fracking industry. now they really function at a higher price of oil, loading up on massive amounts of crazy where interest rates, artificial

wood below to maintain that. at this point at $80 per barrel, it seems like a good spot for fracking to be productive. i'm curious as to what's going on with the fracking industry? guest: that's a good question. you are right, the breakeven price that you would need in something like the permian basin is $43 right now and we are well above that. you have got to wonder, why are we not producing more out of these? again, i think it comes down to cautiousness. for a long time a lot of these producers were just producing, producing, producing, not necessarily profiting off it. over time they start making more promises to rain that in.

eog oil producers were on an earnings call in february and said we might be able to return to pre-covid production by 2022. they said they might, they didn't say they were going to do it. it sent their share price down like six dollars in one day, sending a signal like weight, our other producers going to do this? are they considering it? are other producers going to do that? i think they walked it back later and now they are explicit saying like maybe 5%, 5% production growth next year. so, they are just being very cautious about that. although they are adding production and we are seeing again, this morning they came out and said they saw one

million barrels per day being added by the end of this year. largely from u.s. producers with analytics seeing like another million on screen by next year and again, it's a very gradual increase. a lot of that increase so far has come from not necessarily new drilling, although we have seen an increase in rig activity. but the completion of wells that have already been drilled. the drills that are completed. these have diminished over the last year or so as they have been completed. that is where the sort of production has been added to the market, at least of the u.s., is coming out of those drilled and uncompleted wells.

host: aaa has prices at $3.41 a gallon. members of congress calling for capping the strategic petroleum reserve, what is that? is that a quick fix to the problem? guest: that's an interesting one, because it's like what are the biden options here? more production on the market didn't work, some politicians have said maybe we should just end crude exports or halt them temporarily, though i think that would be pretty disruptive, you know? i think their argument was like if you halt crude exports, he would keep more crude in the united states and lower prices, but it's like when you think about, how much crude has been promised to deliver to other trading partners around the

world, how much time would you need an advance notice to do something like that. would you really want to disrupt the flow for some sort of, in the hopes of pushing down prices in the u.s., right? this seems like a more realistic approach. the idea being we have 600 13 million barrels in strategic reserves. because we no longer import as much crude as we use to, the argument is maybe we don't need as much of that is we used too, right? it's supposed to be there for an emergency and hurricanes, so on and so forth, in times of war, but the idea being that we produce so much more now, do we really need that much crude?

maybe you could do 60 million barrels on the market to bring prices down. the counterargument would be that that would be temporary. you would lose that crude and maybe have to refill it down the road. i don't know. the counterargument to that is the biden administration is saying a lot of this is transitory anyway. they seem pretty confident that, you know, along with, again, we are seeing inflation for all sorts, oil and gasoline with the inflated prices. but the argument is like well maybe this is transitory, so release of the crude, sure, that would help to pull down prices temporarily, but maybe that is all they want. maybe that would be good enough. but i'm not sure how much crude it would take to bring the prices down. i suppose what the administration could do is offer

it out there to see who takes it. host: just about five minutes left with jeff mower. taking your questions and your calls about gas prices around the country. steve, out in california, thanks for waiting. caller: thank you, yes. i read an article that suggests the oil companies could pull up more fuel on the market, but it's more profitable for them to keep the price at the pump high to improve their stock position and that the stock position was worse in the 2010's when the consumer would say that we demand lower prices and they would put more gas on the market and the prices would go down and then they would lose money and profitability.

so, none of the dynamics of the oil industry benefit your average american in anyway way. do they? guest: well, yeah, to your point, they do want to be profitable, it makes sense. but this is an unusual time, to. we are recovering from a big drop last year and were profitable last year. a big drop in demand from last year. and again, they don't really want to add so much, to your point, they don't want to add so much production that they risk, you know, not being profitable again. they have made this promise to their short -- shareholders that we are going to stick to this. so, i get that. as far as the benefits, i think a lot of the frustration comes from the fact that, you know, gasoline is something that we use every day. it's not a luxury good.

i totally get that. when prices rise for, whatever, a new jacket that you wanted or a new deck, something that you could put off, you might say maybe i won't build that addition or i won't redo the kitchen cabinets, i will wait until lumber prices come down. but you need to eat every day, you need to fill up the tank. especially if you are in the part of the country where you need it get a job or find a job. that frustration, i get that, it's a tough one. host: in this conversation about gas we turn to nitro in rockaway park, new york. nitro, good morning. caller: i was doing a little research this morning and the aaa numbers at three dollars 41 cents per gallon throughout the united states, but global petrol price has the average price at

3.76, $3.76 per gallon. now, there are global prices of oil for each individual country, what each pays, dollar amount per gallon. america is blessed. we don't know how good we have it. when you look at countries like ireland, paying twice as much for a gallon of gasoline, europe is hardest hit. middle east, they've got cheap gas. africa even has good gas. but we had people who, the oil-producing states tend to be right-leaning. texas, oklahoma, wyoming. there is, i believe, a concerted

price-fixing, ok? host: mr. mower, what do you think? guest: well, on the global market you are right, prices fluctuate all around. all over the place, even before you get to the retail level. at the retail level you are talking about higher taxes in different locations, like europe, which can add a lot to the price of gas. i filled up in the bronx the other day and i paid four dollars per gallon, expensive to fill the tank, i don't drive every day though, so i feel lucky about that. it can get up there. and then you know, some countries where the prices the flip side. there an artificially low price compared to what else is going on in the market. as far as fixing goes, i don't know -- i thought about that before, i'm not sure how you would fix the price on a global

scale. it seems that there are so many players, so many global components to it. i don't know how that would happen. it's possible that on a regional basis it's why the administration is looking into it, looking at the gouging, you know. they are probably referring to gouging in different locations, right? from regions. host: last call, jim wilson, north carolina. thank you for waiting. caller: you know, when bush was in office, gas was five dollars a gallon and you couldn't even get it. i remember him coming on and saying its supply and demand. this is what i wanted to say. the oil on our federal lands

over here belongs to the people. why are we letting the governments come over here with the people, these deals like they had in the gulf, they are not following the regulation and then they make their profits? this stuff belongs to us. this, sir, on the federal lands, why don't the people own that? we can go in there, we can drill, caps off the grills and we can take our own oil. why is this always a prophet thing? host: running out of time here, want to get you to answer. guest: what the government does lease, it's a lot on the land to oil companies who bid for the lots. those companies have a right to drill there for a certain amount of time. the royalties are, they pay it

back to the government, right? for instance, louisiana had a big offshore industry. louisiana gets a lot of money from oil companies that are drilling. now some people have proposed we should raise the royalties, right? maybe that would help to kind of get to where you are arguing or get a little closer to your argument there. i think it's interesting, there's a big sale coming up tomorrow. big lease sale in the gulf. remember when biden first came into office? one of the things he did was halt oil and gas lease sales for review. it went to court and court said you need to hold the lease sale. so they are going to be holding one tomorrow, it's like 15,000 lots and i believe the gulf has 48 billion barrels of technically recoverable oil.

it will be an interesting lease sale to watch because it may give you some indication on how oil companies view the future, right? how willing are they going to be to jump in and, you know, bid up lots to explore and produce in the area. you might see more activity because of concerns that the administration might take a harder stance down the road on leasing. so maybe it's like get in now while we can. the other argument is why do it now if you are questioning oil and gas futures for fossil fuels because of energy transitions. something we haven't talked about much today. but when you think about the pressures in the transition to cleaner energies, you have to

wonder how profitable this is going to be down the road if oil and gas demand is going to drop in flavor of -- in favor of cleaner energies. host: we will have to end it there. jeff mower, director of s&p global news, you can find him on twitter, it's easy enough to >> sees bed as your unfiltered view of government, we are funded by these companies and more including cox. >> cox is committed to providing families to affordable internet. bridging the digital divide one connected student at a time. cox. >> cox support c-span as a public service. along with these other television providers, giving you a front row seat to democracy.

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