Republicans want to blame Biden (see story here), but that’s ridiculous.
Gas prices are tied to supply and demand. Bottom line, supply is down from years of disinvestment in oil production, and demand is jumping as America comes out of pandemic hibernation and millions of us resume commuting to jobs and traveling for recreation.
The premise that Biden’s policies, such as restricting drilling on federal lands, will adversely affect supply may eventually have some validity, but he hasn’t been in office long enough to have any effect on short-term oil supply. As for the GOP’s argument that rising pump prices are due to general inflation — a questionable proposition — and his spending plans are responsible for that inflation, most of that spending is still in the future and thanks to GOP opposition in Congress a lot of it may never be realized.
The Federal Reserve contends the current inflation spike is temporary, although some observers dispute that. Consumer spending, too, is coming out of pandemic hibernation, and doing so before production does. In addition, there are lingering supply chain disruptions and shipping bottlenecks. One of these is specific to gasoline availability: A shortage of tanker truck drivers.
But the biggest story behind rising gas prices goes back to 2014, when the Saudis flooded the global oil market to drive down crude prices in order to put the U.S. shale industry out of business. That strategy didn’t work, because U.S. shale producers were able to lower their costs. But years of low oil prices led to drastic cutbacks in E&P (exploration and production) spending by the oil majors, keeping new supplies from coming onto the market. The lead time for these is about 10 years, so the effects of less upstream investment are just beginning to be felt in world oil markets.
Other factors also contribute to tightening crude supplies. One of these is the sanctions keeping Iran’s oil off the world market. Another is OPEC’s decision, pushed by the Saudis, to restrict output to force crude prices back up. This is a logical move. They, too, have suffered from low oil prices; and the strategy having failed to achieve its objective, there’s no reason for them to keep it in place.
Oil has always been cyclical, so a swing to the upside is nothing new. Oil prices have been manipulated by OPEC for half a century, so that’s no surprise, either. The shift in OPEC policy coincides with the upswing in U.S. demand.
The real reason for blaming Biden is that presidents get blamed for everything, whether it’s their fault or not. Taking the heat for everything that goes wrong in our country is simply part of the job description. It’s what you sign up for when you seek the job, should you be unlucky enough to be elected to it.