Washington Update From the U.S. Oil & Gas Association - 7.2.2026

Washington Update

The Washington Post celebrates by predicting the Trump administration’s massive July 4th fireworks display will cause dangerous pollution around the Mall and “very unhealthy” conditions across central D.C. We responded with our thoughts.

A Primer For A President Jawboning Retailers – Rockets and feathers--why pump prices fall slower than they rise

With oil prices sliding back after the closure of the Strait of Hormuz, the President has been asking a fair question with an unfair premise: why aren’t pump prices falling as fast as crude? In a Truth Social post, he complained that “the big oil companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for oil,” and floated siccing the DOJ on them for “price gouging.” David Blackmon gave the patient, correct answer:

First, “Big Oil” doesn’t own the gas stations. The vast majority of those stations are owned by independent entrepreneurs who price their gasoline based on the cost of the latest tanker delivery they’ve received.

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“Big Oil” does own the refineries, but refineries are price-takers on the market, not price-makers. They pay market prices for the cargoes delivered to them... Right now, the tanker cargoes coming into their facilities were loaded two weeks ago, when the Brent crude price was $94/bbl, $19 higher than today.

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Even with all this, U.S. average price for regular has dropped by 60 cents in a month according to AAA, and will keep dropping in the weeks to come as long as the Strait of Hormuz remains open.

Economists call this “rockets and feathers”: prices shoot up like a rocket and drift down like a feather. Our friends at the Institute for Energy Research lay out the mechanics. Gasoline sold today was refined from crude bought weeks ago, and independently owned stations “rotate their existing stock gradually rather than dumping it at a loss.” It feels like a rip-off, which is exactly why it makes for good politics, but it isn’t one.

The Federal Trade Commission (FTC) has conducted a number of investigations into price gouging and price manipulation by oil companies, including three large-scale studies investigating the 2000-2001 Midwest gasoline price investigation, the 2005-2006 post-Hurricane Katrina/Rita investigation, and another study in 2007 after a price spike after recovery from Hurricane Katrina. In cases, the FTC found non-credible evidence of collusion on illegal conduct or market manipulation. FTC has found that gasoline price spikes are driven by crude-oil prices, OPEC behavior, refinery and pipeline constraints, environmental fuel mandates, hurricanes, seasonal demand, low short-run demand elasticity, and local supply disruptions.

DOJ can study price gouging again, but it’s pretty obvious why prices at the pump are still high, and it’s not collusion. Instead, here’s an example of why price maybe should be higher--the Energy Information Administration reports that U.S. crude oil inventory are continuing to fall:

We can’t have falling crude oil prices and falling prices at the pump forever. Something will break, which will lead to higher prices at the pump.

Natural gas continues to win the AI era

If you want to know which fuel is actually powering the artificial-intelligence boom, watch what the hyperscalers do, not what they say. This week Microsoft, a company that spent a decade branding itself “carbon negative,” signed a 20-year deal to run one of the largest data centers in the country--powered by natural gas. CNBC reported that Chevron will fuel the West Texas campus, and David Blackmon summed up the significance:

Chevron just signed a 20-year deal to supply Microsoft with up to 2.67 GW of reliable natural gas-fired power for a massive West Texas data center campus. Permian gas. Dedicated turbines. Online 2028.

No virtue-signaling about net zero. No intermittency excuses. Just abundant, dispatchable energy meeting exploding AI demand.

This is how America leads: using our greatest energy advantage instead of pretending wind & solar can carry the load. The adults are running this show.

Consider that scale of 2.67 gigawatts. That is enough electricity to power roughly two million homes, and it is dedicated entirely to a single AI campus in Reeves County, not even connected to the grid. The turbines are coming from GE Vernova and Caterpillar, the gas is coming out of the Permian, and Microsoft is doing this while planning a staggering $190 billion in capital spending this year, up 61% from 2025.

The companies building the future of computing have spent nearly twenty years talking about how they are going to be powered by wind, solar, and batteries, only to use natural gas to get the round-the-clock reliability they need. When the most sophisticated and climate-conscious buyers on earth are quietly signing two-decade contracts for Permian gas, the “energy transition” looks less like a phase-out and more like a phase-in. Natural gas isn’t bridge fuel. It’s the destination.

I’m a bit concerned that Democrats might not know what they are talking about

Last week gave us a couple of examples of Democrats talking about major policy issues and demonstrating that they might not understand anything about the issue. The first is Rep. Judy Chu from California. She said that “we tried to combat [oil industry] with our Inflation Reduction Act.” So, when Congress spent $890 billions of taxpayer money--it wasn’t about reducing inflation? It was about climate change instead? Now she is saying that hundreds of billion in taxpayer dollars were used to “combat” the oil and gas industry and 11 million workers associated with us and the $2 trillion in GDP we contribute. Does she realize she said that out loud?

The second example, comes from House Energy and Commerce Ranking Member, Rep. Frank Pallone from New Jersey. Rep. Pallone talked about the hot topic de jour--data centers. This week, Rep. Pallone called for a national data center moratorium. That is the sort of crazy that we generally hear from Chinese bots on X.com, Bernie, and AOC, not from the slightly more rational Democratic leadership.

Pallone has spent years talking about broadband for all. Does he not know what broadband internet is--it is broadband connections to data centers. So, which is it, Rep. Pallone? Do you want to broadband (connected to data centers) for all or no new broadband connections? No new data centers means no additional internet connections. It’s that simple. And don’t tell Rep. Chu that broadband (connected to data centers) for all also means more natural gas to keep those data centers running.

That is a short report – for now. Be careful out there and don’t lose a finger.

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