The bogus GOP claim that Biden is responsible for
[Glenn Kessler, 7/13/21]
It’s that time of year again: Gasoline prices have spiked, and
politicians are trying to make political hay.
The Fact Checker has had to deal with this faux issue for decades. We
wrote about it in 1996 when then-Sen. Bob Dole campaigned for president
and urged a repeal of the 4.3 cent gasoline tax because gasoline then
was on track to reach $1.31 a gallon. We wrote about it in 2000 when gas
prices appeared to have popped to the highest level ever. We wrote about
it in 2012 when Republicans misleadingly complained that gasoline prices
had doubled in President Barack Obama’s term.
And here we are again. President Biden has been president for only six
months, and somehow his policies have already led to high gasoline prices.
That’s not how it works, folks. Let’s explain what’s going on.
So far this year, gasoline prices have risen 88 cents, or a 40 percent
increase, to $3.13 a gallon on July 6. That’s not chump change. Mark
Finley, a fellow at Rice University’s Center for Energy Studies,
estimated that increase translates into extra costs of $120 billion for
U.S. consumers on an annualized basis.
The biggest factor in the price of gasoline is crude oil. Well over 50
percent of the price at the pump is directly tied to the cost of crude
oil. About 18 percent of the cost relates to state and federal taxes —
the latter of which have not increased under Biden. About 15 percent
stems from distribution and marketing, while 13 percent comes from
refining costs and profits. (These figures are from AAA.)
If you go back over 35 years of Energy Department data, there is almost
a perfect — 95 percent — correlation between yearly crude prices and
gasoline prices, Finley said.
So why has the cost of crude oil increased in recent months? It was
unusually low because the coronavirus pandemic flattened economies
around the world. Now that mass vaccination is helping to reopen many
economies, demand is increasing again. But supply is lacking.
“Oil demand was so low during the pandemic last year, oil producers
decreased their production levels,” said Chris Higginbotham, a spokesman
for the Energy Information Administration (EIA). “It takes time to ramp
up production, so demand this year has increased far more quickly than
production rates. That means there is less crude oil in storage, which
pushes up the price of oil, making it more expensive to make gasoline.”
“Crude prices are influenced by a number of factors — geopolitical
tensions/decisions, production, demand, supply, etc.,” Jeanette McGee, a
AAA spokeswoman, said in an email. “Right now the largest influences are
increasing global demand, promise of leisure travel, optimism of
vaccination rollout and OPEC+ failure to reach an agreement on
Trilby Lundberg, publisher of the Lundberg Survey of U.S. fuel markets
and the acknowledged guru of gasoline prices, agreed that the
overwhelming reason for higher gasoline prices is higher crude oil
prices. “One year ago, the U.S. average retail price of regular grade
gasoline was 97.45 cents lower than it is now; crude oil (using example
of near-month futures price of West Texas Intermediate) was lower by
approximately 81 cents a gallon, leaving about 16 cents a gallon
difference,” she wrote in an email. “Then, removing just over 2 cents
per gallon from that difference due to various individual states having
increased gasoline tax, the result: Retail gasoline is up only about 14
cents a gallon more than is crude oil.”
Higginbotham said that decreased demand during the pandemic has “also
hurt our ability to refine crude oil to make gasoline and other
He added that there were two other unique factors this year. “Texas’
extreme weather led to refinery shutdowns that contributed to tightness
in the gasoline market just as pandemic-related restrictions were
starting to ease,” he said. The Colonial Pipeline shutdown from a
ransomware attack “happened just before summer driving season officially
kicked off, so gasoline supplies got even tighter just as demand was
really ramping up.”
Finally, during the summer, the gasoline blend (which is less likely to
evaporate in the heat) costs slightly more to produce than the winter
blend. That shift adds a few pennies to the cost.
The EIA, in a forecast released last week, believes crude prices will
decline as oil production increases. It projects U.S. regular-grade
gasoline prices to average $2.92 per gallon in the rest of this year and
$2.74 per gallon for all of 2022. It’s worth noting that when adjusted
for inflation, these prices are well within the band of prices since
2004 — and these projections are slightly above and then slightly below
the average inflation-adjusted gasoline price since 1918 ($2.86 as of 2020).
So where’s Biden in all of this? Nowhere. As AAA’s McGee put it, “Gas
prices fluctuate no matter who is in office.”
Media representatives for the Republicans quoted above defended their
statements by arguing that some of Biden’s actions, such as canceling
the unbuilt Keystone XL pipeline and imposing a moratorium on new
federal leases for oil and gas production, have the potential to affect
“The administration’s hostility to fossil fuels and its inflationary
policies have contributed to the energy price increases we’ve seen,”
said Mike Danylak, communications director for the Senate Energy and
Natural Resources Committee, on which Barrasso is the senior Republican.
He cited a Wall Street Journal editorial that stated there is no link
between ending Keystone and higher gasoline prices, but that Biden’s
actions could limit U.S. production, reducing global supply even as
demand surges — and give more pricing leverage to overseas oil
producers. Similar points were made by Russell M. Dye, communications
director and counsel at the House Judiciary Committee, where Jordan is
the senior Republican.
The Pinocchio Test
These attacks holding Biden’s policies responsible for higher gas prices
are silly and false. Gasoline prices are closely connected to crude oil
prices — and a president has virtually no control over that. The world
is emerging from a pandemic that sent oil prices tumbling. Now the price
of crude oil is going up. Simple as that.
Biden has taken some actions that, in theory, could affect energy prices
in the future and on the margins — but he’s been president for only six
months. Any possible impact will happen far down the road — and that
will be a subject for historians, not politicians.
In the immediate period, pinning the blame on Biden for today’s gasoline
prices is worthy of Four Pinocchios.