The Biden administration is reportedly investigating the market implications of shutting down a Michigan oil pipeline. Line 5 is a network transporting petroleum products from Western Canada to Escanaba, Michigan, including crude oil. Daily, approximately 540,000 barrels of these items are carried.
Propane prices in Michigan have already increased by 50% from last year. More than a dozen politicians from the region wrote to Biden, warning him that this decision may cause petrol prices to skyrocket even higher. Republican members of Congress have slammed Biden’s decision on Line 5.
According to Rep. Bob Latta (R-Ohio), who submitted a letter to President Joe Biden on November 4th, the termination of Line 5 will worsen shortages and price rises in home heating fuels like natural gas and propane. “Temperatures will continue to climb as we reach the winter months and temperatures decrease across the Midwest,” he said.
On Wednesday, the national average price of a gallon of petrol surpassed $3.22, the highest level since October 2014. On Wednesday, the U.S. oil benchmark, West Texas Intermediate crude futures, reached a new high of $79, which had not been seen since November 2014. According to CNBC, the price of a WTI barrel was roughly $40 a year ago.
Furthermore, Oil demand has increased, but producers have been hesitant to return barrels to the market. Due to the global economic downturn last year, demand for petroleum fell. Since then, demand has rebounded, but production has not kept up with supply increases, resulting in high costs. On Monday, the OPEC+ group of oil-producing nations decided to stick to a plan to restore 400,000 barrels per day to the market by November.