the bottom line is not a major reason why 2023 was the hottest year on record and 2024 is quite possibly going to eclipse it. it's not as if that volcanic eruption had no impact. it did. and the question is how big? and the answer is still under -- it's still a topic of active research. >> "washington journal" continues.

host: jim burkhard we are back with mobility program -- we are back with jim burkhard with s&p global commodity insights. tell us what you do. guest: we do price assessments for all sorts of energy data, the most well known in the field benchmark into research into what we think will happen in energy markets. what i do is my focus is on the oil markets. host: let's talk about gas. a lot of people will be on the roads. aaa it shows that national average for gas is $3.50 a gallon, about the same as last

year, but a dollar lower than it was in 2022. can you talk about the factors that drive the gas price and why it goes up and down? guest: the price of gasoline in the united states, the biggest reflection is what happens in the global crude oil markets in the crude price is the biggest single factor into the price of gasoline. when crude oil prices are high, after the russian invasion of ukraine, a lot of uncertainty of the russian oil sprite and cases went up that led to higher gas prices. since then, put up gone up, particularly in the united states and the crude prices are lower than they were two years ago and it explains why the prices are lower today for gasoline compared with 2022. host: oil is what drives it or the majority of the price.

oil prices hit $87 a barrel yesterday, up 1%. what is driving that? you mentioned the geopolitics. what else? guest: oil prices are up from where they were a month ago and they go up and down and will continue to do so. the reason that explains prices going up for the last month is a tighter oil market. opec plus, the partners that cooperate on oil supply have maintained their production restraints. so as demand goes up in the summer in the world which it does shoot mentioned americans driving and others driving as well and that has led to a tighter market where we are likely to see inventories for oil go down this summer. when you have lower inventories, that tends to push prices higher and that is the dynamic underway right now.

host: we are talking about global oil prices and gas prices with jim burkhard. the lines are democrats (202) 748-8000, republicans (202) 748-8001, independents (202) 748-8002. president biden -- released barrels of a gallon from the strategic reserve. what impact did it have? guest: it is a big oil market and it takes a lot to have an impact. i think the impact was not so much on the volumes, the u.s. consumes nine million barrels a day. it wasn't a massive volume but a sign of intent that the biden administration could use the

strategic petroleum reserve at some point before the election if they feel gasoline prices are getting too high. host: there is a hurricane in the caribbean as a category five storm. any impact that is having on oil prices or the supply chain. guest: it creates concern and uncertainty and it depends on where it hits and how much damage it does. i am not a meteorologist and i don't the where will hit but if it didn't go to florida and i hope it doesn't, that would have an impact on demand. if it went to the gulf coast, texas, louisiana, then the question is, does it affect the offshore oil platforms or the on short refineries or both? it creates a lot of uncertainty with regard to its path and the amount of damage that could happen. host: i want to ask you about oil companies and the profits they are making. cnn reported this and this is a

quote that says "the top five u.s.-based oil and gas by market cap, exxonmobil, chevron, conoco and others have raked in more than 200 $50 billion in profits between 21 and 2023, a 160 percent jump compared to the first three years of the pro-big oil trump administration. guest: oil prices are cyclical. they go up and down. when prices go up, that tends to help oil profits. when you compare 2020 with 2022, the price of oil was $40. not a good year for oil companies. 2022, the average price was $100, and reflects the uncertainty with the invasion of ukraine. if you know what the price is oil is going to be, you have a pretty good idea of where profits will be.

so i think 2020 and 2020 examples of the impact -- 2022 provide examples of that impact. host: they have been pushing to lower fossil fuels for oil prices have been breaking records. guest: the u.s. produces more oil than any country has in history. and the big reason is why the prices came down after the russian invasion. what drives u.s. production and the u.s. is in in the world. you don't have one national oil company, we have many private and publicly held companies and what really affects how they invest is the oil price. it is as simple as that. when oil prices are high, that tends to lead to more investment, production. when they are low it is the opposite. the u.s. oil industry is really

responsive to changes in the oil price. if there is a de facto regulator of production, it is not the president or congress or state owned company, but the price of oil. host: let's take calls. roland in ellicott city, maryland. you are first. caller: you just trump keeps claiming that he is going to drill and drill. nobody is interested about the only reason why we had no gas prices was because of covid and nobody was driving. and you want to -- that is the reason gasoline is high now.

about drill, drill, drill from trump. that is why have very little coming in. host: ok. guest: complained about prices during covid, every driver knows the price is and it is the relative change within our memory. so if you were to take inflation related gasoline prices come up quite a bit lower than they were 10 years ago. but if you compare to two years ago, it is lower. if you compare it to covid, it is higher. it depends on the psychology of the consumer and what gasoline price they remember paying and how does that compare with today. it is important to look back at

20 22, 1 story is comparing it to covid year it was a different story. host: he mentioned i don't know if you could call it a policy of drill baby drill. what if there was a change in administration and what would that do? guest: the oil price is the single most important factor. the president can impact energy policy and oil policy but it is probably more of a medium to longer term issue. a president can decide to offer more leases in the offshore gulf of mexico or to encourage more drilling on federal land. those are not things that won't necessarily impact production in the next year. whoever wins in november is probably not going to have that big of an impact on production. you go out three to six years, the president can indirectly impact oil production. host: joe in west plains,

missouri, republican. caller: gas here is at $3.05 and just went up from two dollars 95 since to $2.99. how much does a gas station get on a gallon of gas? five or six cents? let's not forget the traders on the floor of the chicago board of options exchange, and the marketmakers on the floor trading oil and commodities, there is a lot to do with the price of anything. and is it true that a barrel of oil is 38 gallons or 39. could you explain that? guest: last question i will tackle first. a barrel of crude oil art gasoline is 42 gallons. so when it comes to gas station profits, it depends on the location and where they are,

just like any retail businesses. some locations will be more profitable than others. and for a lot of locations, the profits they make are not necessarily from selling gasoline but the other things that they sell. it is a competitive business. there is not to many businesses where you see the price in big numbers right on the road. for most of the products you don't see that. they are keenly in tune with it. there is a lot of competition. if you see a lot of price for gasoline and a couple blocks away it is lower, you will probably go to that. profits really depend on a number of other factors like locations and other things that a retailer would sell. host: talk about locations. aaa listed the most expensive place for gas, california at the top and then least expensive with mississippi being at $2.91. how does that work?

obviously there are cost-of-living differences what impact does that happen on the cost of gas? guest: it is logistics. most of the refining capacity in this country is along the gulf coast, texas, louisiana, mississippi. so it is a much smaller transportation cost. a lot of the gasoline that comes to the northeast has to go on a pipeline so you have to pay for the pipeline to get it from the gulf coast up to maryland or new york or wherever you are in the northeast. the concentration of refining capacity in the gulf region really explains why that is such a competitive price in that area. california is unique. they have special formulas related to controlling pollution which makes the price of gasoline more expensive than the rest of the country. host: david in new york, independent line. caller: i am glad you brought up the strategic oil reserves

because i know it is an election year and the price of oil is a huge problem and inflation is a problem for democrats. you talk about only so much was released but like the guy was saying about the traders, when you release a chunk of oil, you can pana this everything is derivative. you can panic the options market by releasing oil. get the thing that concerns me is saudi arabia has moved over to the bricks. what do you think about that. i am curious as to how they are siding with russia and china and not saudi arabia, probably because they are afraid of russian sanctions. guest: a lot in those questions. the first one, it is good to

remind ourselves, it is a global oil market. over $100 million -- 100 million barrels of oil consumed. the u.s. is the largest consumer but no one can exert unilateral influence or control over the price of oil. any u.s. president wants gasoline prices to be lower rather than higher, but there is a mixed degree of success on that because it is difficult to control. when it comes to saudi arabia and the u.s., i would argue that u.s.-saudi relationships are acting good -- actually pretty good, given what could have transpired after october 7, the war in gaza. the u.s. and saudi arabia have made progress towards developing an agreement, a security agreement that may involve other factors with regard to israel. in some ways, the u.s.-saudi relationship i was a is probably better than it was a couple

years ago. brazil russia china india, very important market. very important politically but it is not a monolithic entity. if you look at china and india, are the allies? no. they share some common interests, yes, but a lot where they diverge. so collectively a lot of population in importance but not a monolithic block that moves in one direction or another. it is a far cry from something like nato. it is not even a trading -- treaty organization. host: president biden had asked opec plus countries to increase oil production to bring down the price of gas. how did they respond? guest: a u.s. president, whether democrat or republican, always probably want more production out of opec or opec plus.

those countries have their own international sovereign interests and if you go back in time before opec plus, there was the texas commission that regulated production. opec plus, they don't want prices too low or too high. so when they make their decisions, it is based on their read of the markets and their own national interest and their actions by continuing their current production constraint reflect that. i don't want to get too deep into oil market analysis, but opec plus announced they are aiming to increase production later this year and next. that is a big change, because if they do that, it would be the first increase in oil production from opec plus in about two years. host: i am sure president biden wants that before the election before or after. guest: any u.s. president would like that.

host: allen in east chicago, illinois, democrat. caller: thank you for taking my call and i thoroughly enjoy this show. two questions i wanted to ask that i am confused about. i agree come most presidents want opec countries to increase production. it is it true that back in 2020 around with covid, they cut back on using a lot of gas, was there a price war also going on between opec plus countries and russia over the oil production? saudi arabia wanted to cut back because people weren't using as much but russia wanted to push out more because they needed money for something, i don't know. is it true they got into a price war with ableist -- both increased production and the

price was down $24 a barrel? on top of that, did donald trump make a call to saudi arabia and russia where no he got them to and the price for but got them to agree to cut production by over 900,000 barrels a day. that is one question i wanted to ask. the second question i wanted to ask is 2022, when the price of gas went up, i know it is oil that regulates but refineries set the price of gas after they buy the oil in the second quarter of 2022 the price of gas was five dollars to seven dollars a gallon in there was some concern about russia and ukraine, but russia kept producing oil and the price of a barrel came down. the price of gas went up. the oil companies made the

biggest profits ever in 2022 which to meet says they have no problem paying for oil. it was just that overpriced gas. host: let's get some answers. guest: give a good memory when it comes to 2020. when covid first hit in china and it really became pronounced in january and february. it wasn't clear if it was being spread around the world. in early march, opec plus met and said should be cut production are not. there was a lack of agreement about how serious covid was or was going to be. no one knew in early march how hard it was going to hit. so there was disagreement within opec plus about how much to cut or not. that disagreement did the two the lack of any agreement and what we saw was saudi arabia and

other opec plus countries increased production dramatically without an agreement. that lasted for march and april. in fact, for oil traders, it was april 20, the price of oil was negative can you believe that? that is how oversupplied the market was. that did lead to opec plus agreement and president trump at the time did play a role in helping facilitate communication between some of the major powers. so i want to say -- i won't say he is responsible but i think it is clear he certainly did play a role in its coming about. the other question about refineries, in 2022, there was less refined gas than there was in 2019. you are right, the amount of refining capacity played a role in the oil market and gasoline prices but because of covid, the

oil market demands 20% in the spring of 2020. it was devastating. negative oil prices, paying someone to take your oil, wow. we saw some refineries close. in 2022 refined capacity than there was before covid and we were recovering from covid, the world was recovering and gasoline was -- demand was increasing and you have the russia-ukraine war that put upward pressure on gasoline and that is what happened in 2022. host: steve in anaheim, california, republican. caller: the question is, how much is regulation on wall street playing a price -- playing a role in the price of oil. since i am not -- in the west coast and there is not a population, we rely on foreign

oil to be refined. the refineries are basically the problem as well because they are closing down refineries and deliberately driving up the price of gas. i can go across the border and by gas project -- two dollars a gallon, get if i come across the border in california, it is five dollars a gallon. but mexico's guest is refined in the united states. that is it for me. guest: this is a perennial question in the oil market and the commodity markets. speculators driving up the price? you don't have an open liquid market without speculators. it is about allocating risk. the first market in chicago in

the 19th century is about farmers wanting to offload risk to people who were willing to take it. you need speculators to have a market. if you don't have them, it doesn't exist. that can intensify a trend, yes. market psychology is crucial. you think the price is going to go higher or do you think it is going to go lower? in any market, market expectations play a critical role. so speculators do not set the price of oil but there can be times when a certain psychology may take hold. just like in the stock market, where prices can go up or down and that can be intensified with speculative behavior. but speculators do not set the price of oil, gasoline and they play a critical role in the functioning of the market. host: diane in morristown, new

jersey asks, what was the impact of drilling being halted on public land? guest: i won't say it has been halted, but there have been some restrictions put on land and drilling on federal land. so far, as of right now, it is tough to say it has an discernible impact. the u.s. is producing any -- more than anyone in history. in the years ahead, three to five years, restrictions on drilling in some places could begin to maybe have an impact on production. but so far, it is difficult to see that when the u.s. is producing more oil than it ever has before. host: richard, seaside, oregon, independent. caller: i was wondering why he was not telling the american public the truth.

the russia -- russian republic and trump have done away with most things for the people of the united states. i call him a russian republican because he is a friend of putin's. the reality of oil is they make $200 billion last year. they are still going after more. that is a record amount. year after year, it is not a democratic problem, it is an american problem and it is going to get worse as long as russian republicans are in control. do you have a solution for that? also, what about the chevron? why was the chevron act pitched? could you explain why we that in the first place #thank you. guest: the chevron act, a supreme court decision and i am not a legal expert and not the

best person to answer that so i'm not going to answer that. i am not sure there was a question in there. i understand the point you are making but i would just argue that the global oil market is global. there is no one who controls it. when oil prices are high, profits are high and that attracts a lot of attention. when oil prices are low, like 2015, 316 or 2020, that doesn't get a lot of attention. we certainly understand why. the key is oil is cyclical. it always has. from the first run of the well in pennsylvania in 1800, prices have always gone low and high. i think the dynamic of profitability versus less profitability will continue. companies make a lot of graphics and that makes attention. host: joseph in fayetteville, north carolina want you to address the effects on the market of the russia war, would you have.

he also talks about the heat dome over the central united states. guest: the heat dome is having an impact on electricity demand. if you have air conditioning, you are probably using it. i think it does have an impact on electricity consumption through greater use of air conditioning. oil is not used to generate power, very little is used to generate power in the united states or even globally. so probably the heat and cold weather tends to have more of an impact on natural gas which is a very important and large source of power generation in the united states. host: jim burkhard vice president s&p global commodity insights and head of research for oil prices