When gas prices topped $5 per gallon in June, President Joe Biden and his administration denied any culpability for the pain at the pump. Instead, the White House presented two talking points that passed the buck to other parties. The first was the laughable “Putin’s price hike,” while the second was greedy mom-and-pop gasoline stations. The Biden administration is comically accepting full responsibility now that prices have come down. So, do presidents influence gas prices, or don’t they? That is the $4.35-a-gallon question.
Gas Prices Stuck in Reverse
In a series of tweets over the weekend, the White House was sure to take a victory lap over falling gas prices, claiming that its “plan to lower costs for families is giving Americans some much-needed relief.” The president and his team also took the opportunity to nudge energy companies to lower prices even more, arguing that it is wrong that crude oil prices have plunged by about 20% and gas has fallen by about half that amount.
“An extra 60 cents a gallon back in your pocket is meaningful. It’s breathing room,” Biden tweeted. “And we’re not done working to lower costs for families.”
This is a far cry from the administration’s previous messaging. For months, Democrats have been repeating the “Putin’s price hike” line, hoping that the American people will buy the propaganda emanating from 1600 Pennsylvania Ave. Surveys have found that many Americans do not believe this narrative, with voters blaming Biden more than Putin for the 38% increase over the last year. Still, the numbers have not prevented Biden and his officials from engaging in this mendacity, although the receipts show that energy prices had been climbing before Russia’s invasion of Ukraine.
Now that the average price for a gallon of gasoline has tumbled around 13% since hitting its peak in June, Democrats and the mainstream media are unsurprisingly championing Bidenomics as the cure for the agony that motorists have endured since Biden arrived at the Oval Office. While this is politics at its finest, the critical question is whether it accurately depicts what is transpiring in the marketplace.
The Truth Behind the Fall
So, did Russia un-invade Ukraine? Did energy firms suddenly realize they had those 9,000 leases that the administration keeps talking about? Did the mom-and-pop gas station stop being greedy? No. The primary factor has been investors worried about a recession that would destroy national and global demand. As a result, traders have been hitting the sell button on West Texas Intermediate (WTI) and Brent futures, sending prices below $100 per barrel. This allowed gas and diesel prices to finally come down and give the United States a much-earned respite.
Consumer demand has also taken a breather, with drivers feeling pinched by elevated prices. This was seen in the recent Energy Information Administration (EIA) storage report, highlighting a 3.5-million-barrel build in gasoline inventories, as well as a 447,000-barrel increase in output. “Consumers appear to be taking the pressure off their wallets by fueling up less,” said Andrew Gross, American Automobile Association (AAA) spokesperson. “And there’s reason to be cautiously optimistic that pump prices will continue to fall, particularly if the global price for oil does not spike. But the overall situation remains very volatile.”
Put simply, the drop had more to do with Biden and Federal Reserve Chair Jerome Powell slipping the nation into a recession rather than the administration’s efforts or the Fed’s rate hikes. Of course, it is Politics 101: Pass the blame for the bad and take credit for the good. Unfortunately, it took a looming recession to slow down sky-high oil prices rather than tapping into American energy.
Is This the Permanent Trend?
While this has relieved consumers, both at the pump and on their utility bills, energy commodities are creeping back up again. US crude is flirting with $100, while natural gas prices have topped $9 per million British thermal units (Btu). Biden has benefited from a mostly cooler-than-normal summer so far. He can only hope that global warming will rear its ugly head come winter and ensure temperatures are above seasonal norms. If this happens, and there are enough stock builds, the administration might be able to navigate through the torrential storms and pat itself on the back. That is, if Moscow invades Ukraine again, oil and gas firms abandon their 9,000 leases, and mom-and-pop stations revive their greedy Gretchen ways.