Can We Talk Sanely About Gas Prices? Please?
The Truth Is a Little More Complicated Than Blaming One Person
Everybody has noticed that gas prices are spiking.
Even as somebody who drives a hybrid, I can confirm that gas prices indeed suck. In real dollars, they are the highest they have ever been.
Of course, everybody wants to blame somebody for the hike in gas prices. Because this is 2022 and everybody lost their minds around 2015 or so, everybody wants to blame the “other guy” for high gas prices. So let’s take a step back and talk about some very real realities.
Joe Biden Did Not Cause Gas Prices to Hike: Everybody likes to blame the President for causing gas prices to go higher. But guess what; he doesn’t make gas cost expensive. No President makes gas expenses. No President has any impact on the short-term cost of gas. That is all controlled by external factors, many of which are far beyond any President. If anything, the first action Biden took that may directly affect supply happened just today: banning the import of Russian oil.
The corollary to this is:
Joe Biden Cancelling the Keystone XL Pipeline Did Not Cause Gas Prices to Hike: I know that everybody likes to dunk on Biden for canceling the Keystone XL pipeline. And they should: the cancellation of Keystone XL was a shortsighted decision that hurts American energy security and cost a lot of Americans good, high-paying jobs. But gasoline that traveled through Keystone wasn’t going to hit the American market until 2030 at the earliest. That has zero impact on current gas prices.
The Russian Invasion of Ukraine Did Not Cause All of the Gas Price Hikes: Blaming Russia and Vladimir Putin for the hike in gas prices accounts for some, but not all, of the gas price hike. Uncertainty in the markets did increase after the invasion and that accounts for some of the most recent hikes. But when you go back three years the prices went up drastically too. That’s not all Russian influence.
So what did cause the drastic gas price hikes over the last two years? Why is gas so much more expensive under Biden than Donald Trump? Three reasons:
COVID: The price of gasoline crashed in April 2020. Obviously, that was due to the effect of COVID and reductions in gasoline usage and travel. But there were other downstream impacts of that. With more gas being available, supply far outpaced demand. However, eventually demand caught up and exceeded demand as work stoppages during COVID decreased supply, something that was exacerbated by supply chain issues. This caused some of the price increases throughout 2021. But what also caused increases was…
Inflation: Inflation is sky-high right now. Why? A toxic combination of supply chain shortages, minimum wage increases, and government handouts through federal stimulus programs. Inflation increases costs across the economy which ends up also increasing gas prices.If only someone had told you all that artificially higher wages would lead to inflation....JUST IN: US Inflation increased 7.5% from Jan 2021 to Jan 2022 – the highest since 1982 and above expectations. Food, electricity and rent drove the high inflation. The monthly increase in January was 0.6%, the same as December. https://t.co/dzqwrI6MnQHeather Long @byHeatherLong
Oil Companies: It’s not what you think it is either. Read this:
The root cause of today’s high gas prices isn’t politics: It’s financial pressure on oil companies from a decade of cash-flow losses that have made them change financial tactics. Investment in new wells has dropped more than 60%, causing U.S. crude oil production to plummet by more than 3 million barrels a day, or nearly 25%, just as the Covid virus hit, and then fail to recover with the economy. For an oil-drilling sector that lost 90% of its stock value from 2012 through early last year, it hasn’t been the toughest call in the world.
That means oil companies aren’t as flush with cash to keep the oil flowing. Again, supply and demand is the cause.
It’s sexy to blame Joe Biden or Vladimir Putin or somebody else as the one person responsible for this. But the truth, as always, is a little more complicated than blaming one person.
Just don’t be Pete Buttigieg.