Memorial Day Weekend is the unofficial start of summer and the kickoff to the summer driving season. Triple A is forecasting that 44 million Americans are hitting the road, the second most since 2005. For many, the getaway comes with a hefty gas price. In this episode, we talk with an industry expert about gas price trends and what Americans can expect heading into the summer. I'm Daily Wire Editor and Chief, John Bickley. It's Saturday, May 25th, and this is an extra edition of Morning Wire. Joining us to discuss the cost of gas for your Memorial Day weekend and beyond is Derek Morgan, Executive Vice President at Heritage and former Senior VP for American fuel and petrochemical manufacturers. Derek, thanks for coming on.

Of course. My pleasure. Appreciate the work you all do.

We've seen gas prices fluctuate over the past few years. First, what is the average cost for a gallon of gas right now and what's driving it?

Nationwide, the average is about $3.60 a gallon. And that really is a combination of things. Crune oil price is over half of that. The next biggest factor would be refining costs. Then after that, you have taxes at a full 15 % of the price on average nationwide. And of course, that's higher in some states. And then distribution and marketing is about 10 %. So all in all, 360, that's about an increase of 50 % over when Joe Biden took office.

Where are we seeing the highest costs and what's the differences in various regions and cities?

Yeah, the highest cost is almost always on the West Coast, and there's lots of reasons for that. They require special formulations of gasoline, so it's not easily able to be supplied from other places in the country. And so California typically has the highest prices, along with Hawaii and a few others there on the West Coast.

Now, we've all seen this trend of gas prices going up over the summer. Why is that the case, and should we expect it to last all summer?

Yeah, it's normally Usually, the prices do grow up over the summer. There's a special blend of gasoline the EPA requires to help for environmental reasons. And because of that, refiners are able to get just a little bit less gasoline out of a barrel of oil over that summertime blend. So we see that pretty consistently. And then demand is also higher in the summertime. And so it's mostly the demand point that causes prices to be higher over the summertime. And then, of course, in any market, it's supply and demand. And when you have a higher demand, you tend to have a little bit higher prices.

You mentioned that gas prices have gone up 50% since President Biden took office. What specific policies have led to that rising gas price over the last three years?

Yeah, part of it's general inflation. Inflation continues to be a problem, of course. I would pinpoint profit spending and borrowing by the government just too much money chasing too few goods. But in addition to that, you've seen some really bad government policies. I'd point to a few. Number one was very early on in his administration, he did two executive orders on the the first day. One was to stop Keystone, which would have supplied crude oil from Canada, and the other was to stop any drilling activity and the Arctic National Wildlife Refuge. Then the second week, he issued an EO that did a pause on leasing on federal lands and offshore, and that's about a quarter of US production. So the failure to allow drilling is the first. The second would be, overall, just suppressing investment in oil and gas. You probably remember that during the campaign, he said we needed to transition away from the oil industry in one of the last debates And then he also said in the State of the Union address just a year ago or so that, We're going to need the oil industry for about 10 years. But if you look at the scale for investment needed in an industry like oil, usually it's taken decades decades to recoup your investment.

And so when you have a government that's out to transition away from an industry, it's hard to really encourage much investment in it.

On the other hand, we have Donald Trump famously saying, Drill, baby, drill. Yes. How would additional drilling affect US gas and oil production in the short and long term?

Well, the US production over the last couple of decades has provided a huge amount of relief. And of course, if allowed to go and explore both on federal lands, onshore and offshore, that would help a lot. And then also just a general recognition that we're going to need oil and gas for a long, long time could encourage more companies to make investments. The other thing I'd point to is the Biden administration has pushed to transition the auto fleet all to EVs. Of course, they've allowed California and a number of other states to do a 100 % ban on the internal combustion engine. And then many other states where it ratchets up to two-thirds of cars being EVs just in a few years. I think if President Trump comes in and restores consumer choice of automotives for the American people, and then also allows some of this drilling, I think that will really turn things around here in the US.

Speaking of EV production in our capacity in terms of infrastructure to actually maintain it. Can California or any state handle an all-electric vehicle industry?

No, there's a lot of problems with it. First of all, the consumers just aren't accepting it. It just doesn't work for every use case. You pretty much have to have your own house to be able to easily charge it. You've got to have a fairly limited commute so that you're not concerned about the range. It really doesn't work well in cold temperatures also. So you think about, we saw this in Chicago this year, where a number of the chargers were not functioning properly. And even in sunny, temperate California, there have been studies that showed anywhere around 30 to 40 % of chargers aren't working at any given time. And that's all assuming you have the baseload that you need. And you know, John, we're looking at a future of AI, certainly Bitcoin, other very high energy use for electricity. And throwing on top of that all of our automotive needs is a really tall order, especially in a time of day when it's really hard to permit anything, be it transmission lines or certainly any electricity generation outside of solar wind, which, as we know, just don't work everywhere and don't work all the time.

Since we're on the topic of California, the California Air Resources Board announced that gas prices will begin rising in the state 50 cents every year, starting next year. This is part of their clean air efforts and a package of bills passed several years ago. What's the likelihood of that actually going into effect? And will it help Californians?

We've seen this time and time again from California, where they have these government mandates. And then when the prices show up at the pump and consumers are up in arms, then they try to blame the oil companies. But these kinds of fees and charges typically don't make sense. They're doing everything they can to try to pursue a carrot and a stick, a carrot in terms of a subsidized electric vehicles and all the rest. And then the stick is to try to just increase the cost. And it's It's really a counterproductive proposal, this one in particular. It's really just white background noise compared to what's happening with China. China is releasing more than two times the amount of GHGs the United States is, and just their growth is going to swamp any small reductions that we can make in the US.

You brought up the massive amounts of energy needed to power AI and Bitcoin and other technologies. How have we seen those impact the power grid in recent years?

Well, we're just starting to see it. And a lot of times when companies are deciding where to locate for these endeavors, they look at where there's affordable energy and reliable energy. And so you're seeing growth in those kinds of places across the country. I think if you look at some of these projections, and it's hard early on to know exactly how prevalent this is going to be, but if you look at these projections, you're looking at a huge baseload need. And unfortunately, there's just not a way to make solar or wind work in that world. We don't have the capability to store that wind energy when the wind is blowing or when the sun is shining. Batteries are just too expensive, and it's really a pipe dream to think that we're going to have the energy storage that we need for that. So that means you need good old fashioned coal and natural gas to help provide that baseload energy.

What about nuclear? Have we seen any activity on the nuclear front in terms of opening up new power plants?

We have. There's been little green shoots in Georgia and some other places, and we're pretty bullish on nuclear here. The Heritage Foundation, we think if government just got out of the way, that the market demand for energy would point in the direction of nuclear, especially a small modular reactors, where you don't have to have quite as large of an investment up front. We think that can be a big part of the energy landscape going forward. But we also have to recognize that we have a plentiful natural gas resource, in particular in the US, and we have hundreds and hundreds of years of coal as well. We think it's incumbent on policymakers to allow all forms of energy to compete and all forms of energy to provide the electricity that we're going to need.

President Biden just announced this week the release of one million barrels of gasoline from the Northeast Reserve in a bid to lower prices at the pump. Will this help and will the effects be long lasting?

No, it's really a drop in the bucket, quite frankly. The refined storage is really meant for absolute acute emergency, it's like a hurricane or some major weather event. That just makes it impossible to get supplies in. What I would say is the strategic petroleum reserve is crude oil. It's much larger. That can help on the margins, but really, there's not enough refined product storage to make a considerable difference.

Speaking of, what do you think about Biden's use of the oil reserves thus far in his presidency?

It's really been pretty counterproductive, quite frankly. It's meant to be there in case of a major supply disruption, not as a means to try to adjust price. And I think most observers look at what he did earlier in his term as really trying to just relieve some of the price pressure around the time of the Russian invasion. And now they're talking about trying to fill it back up. It's at lower levels than it used to be. But we also have to recognize that we're in a little bit different situation than we were a few decades ago. We're now able to produce, particularly if you look at North America as a whole, we're really able to be energy sufficient here when it comes liquid fuels. We don't really need a huge stockpile like we once did when we were much more reliant on, particularly Middle Eastern oil.

You've pointed to a few ideas already, but what approaches and policies would you recommend to increasing energy independence in the US?

Well, I think the number one thing is to not go all in on EVs. We talked about maybe some capacity issues and some convenience issues. The other thing is national security. We're finally here in the US for the first time since President Nixon, pretty much every President has wanted to be energy independent, and it was really President Trump that got us over that marker. And so now we've got the oil and gasoline supplies that we need, and we're talking about shifting to EVs when it's completely dominated by China. In some cases, 80 % or more. For some parts of electric vehicles, it's 100 % in China. And so we just have a big, big problem here with pushing people to something, number one, that they don't want to use, number two, that's really expensive, and number three, that would play right into China's hands. So that's really number one, two, and three of the policies that are going to have to be undone by a future conservative President, that President Trump or whoever the American people select. And so I think that to me, that's the biggest one, The secondary one would be a recognition for reliability to play a role.

Right now, we put all of the emphasis on emissions and not enough on reliability. We saw in Texas, we've seen in California. Many of your listeners have probably seen even in their own local communities. There's a real nervousness when it comes to a particularly hot day or a particularly cold day when the energy needs are greatest, that we're actually going to have the energy on hand to be able to heat or cool our homes like we need to.

We've seen what President Biden will do in terms of his energy policy. What would you expect President Trump to do if he wins again in November? What actions would he take first, do you believe?

Yeah, I think when it comes to energy, he's going to try to make America energy dominant again. He's been pretty clear about that. He's very skeptical of green energy, both in the automotive sector and also in the generation sector. So I think he would see right away that he unbuzz these rules out of EPA that are mandating electric vehicles and banning internal combustion engine vehicles. I think he'll scrap all of that. He He also try to unleash all forms of American energy, be it coal, natural gas, and renewables where it makes sense. That'd be my guess, is he's going to want to really stress affordability. He wants to tackle inflation. He's talked about that again and again. The American people are really looking at basically the prices for gas, groceries, rent are out of control, and they want to have answers. And I think President Trump this summer and end of the fall is really going to make that a centerpiece of his campaign.

Well, Derek, thank you so much for talking with us. Yeah, my pleasure, Josh. Glad to be with you. That was Heritage Executive Vice President, Derek Morgan. And this has been an extra edition of MorningWire.