The Daily Mail, a U.K.-based tabloid with a rightwing slant that I sometimes use as a story source (because they publish suspects’ names and publish photos of the bodies when other media won’t) posted the following headline on Wednesday, May 18, 2022 (here):
Gas stations in Washington reprogram pumps to prepare for $10-a-gallon fuel as average price soars to $4.57-a-gallon – almost twice the $2.41 during Trump’s final month in office
And the following graphic:
This is pure yellow journalism, designed to gut-punch people who only read tabloids and comic books, and don’t know how to think. It’s also political propaganda that plays on ignorance and emotion.
Biden has almost nothing to do with soaring gas prices. They’re a result of demand exceeding supply. The high demand is from people driving and flying again. The low supply is a result of the Ukraine war aggravating years of low investment in oil production. His contribution to high gas prices is helping to end the pandemic. Want him to take that back?
Let me show you another graphic. Below is part of a Value Line report dated February 25, 2022 (click on image to enlarge). This is Exxon Mobil’s financial history.
Daily Mail isn’t exactly lying, but they’re sure misleading you. Let’s start with this: The first chart above is the national average gas price, not Washington State, and is skewed by low gas taxes in some states. In Washington, federal and state gas taxes are 63.4¢ per gallon. That keeps local pump prices from hitting the national average.
Now let’s look at the $1.77 national average price in April 2020, the depth of the pandemic lockdowns. In that quarter, Exxon’s sales plunged to just $32.6 billion from $56.2 billion in the previous quarter. For the full year of 2020, Exxon lost $22.4 billion. The story is the same with other oil companies. The point is, they were selling gas at a loss in April 2020 because of depressed demand due to the pandemic. That was a one-off, and wasn’t sustainable, so that’s not a valid figure to use for comparison.
But the real roots of today’s low supply and high gas prices go back to 2014, long before Biden became president. That’s when Saudi Arabia flooded the global market with cheap oil to destroy the U.S. shale industry, a major new competitor. As Exxon’s financials show, its profits were cut in half, from $32 billion to $16 billion, between 2014 and 2015; and by 2016, profits were halved again to less than $8 billion. What did Exxon and other oil companies do? They slashed capital spending on future production to survive. That’s why we don’t have that production today.
This has nothing to do with Biden. Blame Saudi Arabia. What can Republicans can do about it? Nothing. They want to expand drilling on federal lands, but opening more land to leasing won’t ipso facto increase production. The oil companies already have over 9,000 federal leases they’re not using. They’re wary of plowing money into drilling that won’t pay off if oil prices drop again. The Biden administration, in fact, has been offering leases — with no takers. That won’t change if Republicans take over the management of federal lands.
Another problem is you can’t increase production overnight. For example, if you elect Republicans, and they allow drilling in the Alaska National Wildlife Refuge, that oil will reach gas pumps 8 to 10 years from now. By then, you’ll likely be driving an electric vehicle. Knowing that, oil companies may pass on investing in ANWR oil development.
Consumers themselves contribute to high gas prices. When pump prices are low, they go out and buy gas guzzlers, apparently expecting pump prices to stay low. But that, by itself, pushes up demand and prices.
Finally, getting back to the Daily Mail story, the fact that Union 76 is programming pumps for $10 gas doesn’t mean gas is headed for $10, as the story misleadingly implies. It’s a competitive market, so Union 76 can’t dictate gas prices. The reprogramming is a contingency, in case prices do reach that level. Why would they? The main factor here is the Ukraine war; Russia is was one of the world’s largest oil exporters, and Europe’s recent moves to sanction Russian oil could further tighten the global market and push prices up more. Do you think the world should surrender to Russian aggression so Republicans can pump cheap gas into their pickups?
They seem to think so, or at least some of them do — Rand Paul and Tucker Carlson, among others. But do they really think the oligarchs, if allowed to sell their oil on world markets again, will sell it cheap so they can have cheap gas? They like to think so.
Something else about Daily Mail’s chart: It highlights the gas price when Biden was elected, not when he took office more than 2 months later. If you look at that chart closely, you’ll see the price curve began climbing while Trump was still in office. One final thing: The “$2.41 during Trump’s final month in office” was 36% higher than 9 months earlier. He couldn’t keep gas prices from going up, either.