Federal Price Controls Stifle US Oil Supply

The recent surge in oil prices has been a persistent issue for the United States. Since the war with Iran began, the Strait of Hormuz has effectively been closed, and the Saudi pipeline was knocked out by drones on September 10. The result is a severe shortage of oil supply, leading to record-high diesel prices.

The federal government has attempted to manage the price rather than addressing the underlying shortage. A series of measures have been implemented, including releasing strategic petroleum reserves, waiving shipping laws, and pressuring producers to cut prices. However, these efforts have only provided temporary relief and have not increased supply.

According to Adam Butcher, president and co-founder of Basin Ventures, the mechanism that reliably ends a shortage is increasing supply through drilling new wells. However, this process has been hindered by regulatory delays and public pressure on producers to keep prices low.