The Biden Administration Hasn't a Clue About Why Gas Prices are Soaring
It's hard to not find oneself full of contempt with the Biden White House, given its flatfooted response to soaring energy prices.
Nationwide average energy prices have shot up 70.63% since Joe took office back in January, going from $2.40 a gallon on Jan. 25, to $3.40 a gallon today, according to AAA data. In the eight western-most states in the union, plus Pennsylvania, the average goes as high as $4.71 a gallon. That comes on top of a record 69% rise in oil prices that occurred in the interim between Joe's "election" and the day Joe took office. That kind of pricing is known in markets as "anticipatory." With pile-on price spikes, apparently the markets didn't anticipate enough.
Here are the two responses we've seen thus far from the Biden administration -- the first from Bloomberg News:
The Biden administration has a new response to soaring oil and gasoline prices it sees as politically perilous: blaming big oil.
“Oil prices are falling,” Klain said. “Now, when will the industry bring down gas prices????”
And that came just a day after President Joe Biden wrote to the Federal Trade Commission to probe possible illegal conduct in U.S. gasoline markets in a letter in which he expressed concern about the difference between pump prices and the cost of wholesale fuel, while citing what he said was “mounting evidence of anti-consumer behavior by oil and gas companies.”
“I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct,” Biden said in his letter.
And at a briefing last week Press Secretary Jen Psaki twice pointed to “price gouging” as a reason why prices have stayed high even as oil supplies have risen.
He's got it all pinned down to price-gouging, something that Congress and better investigators have "investigated" many times over the past 50 years at times when globally price oil prices went up. They even 'pre-accused' gas stations of the same in the wake of a foreign cyberattack on U.S. energy last May. Every single time, these investigations have come up zero, repeat, zero, on the matter. There is no price-gouging. Not even price-controlling OPEC can control global prices. There were "investigations" in 2004, 2006, and 2012 that I could find offhand, and I know there were more.
Back in 2007, the New York Times called the 'price-gouging' canard a "phantom menace' with this notation:
The Federal Trade Commission has been skeptical about accusations of price-gouging on gasoline prices. In 2004, the agency studied price changes in gasoline from 1991 through late 2003. It concluded that about 85 percent of the price variability — both up and down — reflected changes in crude oil prices.
Here's what a colleague at Investor's Business Daily exposed in 2012 after the next howl of price-gougings:
But the Federal Trade Commission and the Government Accountability Office have repeatedly investigated the oil industry for collusion or price gouging after previous price spikes. Each time they've found the same thing: The industry is highly competitive, and supply and demand, not collusion, set the price of oil.
It's the same with speculators. As IBD reported last month, a September 2011 study from the Institute for International Finance found no "clear causal link between financial investment and commodity prices" while the link "between commodity prices and fundamental supply and demand factors is indisputable."
An earlier investigation by the Commodities Futures Trading Commission found the same thing. Not that Obama, or his fellow Democrats or their friends in the mainstream press, will ever explain any of this.
With that Wile-E-Coyote maneuver sure to come up zero again, Biden's second solution was to manipulate prices through the use of Strategic Petroleum Reserve. Here's how the White House itself announced it:
Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.
The President has been working with countries across the world to address the lack of supply as the world exits the pandemic. And, as a result of President Biden’s leadership and our diplomatic efforts, this release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. This culminates weeks of consultations with countries around the world, and we are already seeing the effect of this work on oil prices. Over the last several weeks as reports of this work became public, oil prices are down nearly 10 percent.
Which is laughable. Fifty million barrels of crude will supply less than three days of U.S. energy consumption. The reputed plan to have other countries release their supplies too is dependent on their willingness to keep to their agreements, which few of them actually have a record of doing. What we see now is U.S. oil tankers taking U.S. oil from the strategic reserve and taking it by tanker to China as part of this three-card monte deal. The Chinese are supposed to pay it back when energy prices fall. Anyone who thinks they are going to fall is pretty much an idiot.
Meanwhile, draining the strategic reserve is not what the reserve is for. It's there for an emergency. Specifically, it's there to supply the U.S. Navy should there be some kind of catastrophe that halts access to energy. What happens if the U.S. encounters a real emergency, which is what these reserves are for?
Reserves are for emergencies, not a clean-up mechanism to bail out bad policies, nor devices for lifting bad poll numbers. Biden's use of these reserves is clearly a misuse, and as former Trump official Stephen Miller notes, a humiliation:
America has among the most abundant and plentiful energy supplies on the planet earth. Biden depleting our emergency stockpile is an international humiliation.— Stephen Miller (@StephenM) November 23, 2021
Meanwhile, and not surprisingly, the Chinese are not living up to their end of the bargain. Here's a tweet from former Trump administration National Security official Victoria Coates, who closely focused on energy issues:
Amazed to learn the vaunted collaboration with fellow consumer China turned out to be underwhelming. https://t.co/rn85cjPLpj— Victoria Coates (@VictoriaCoates) November 23, 2021
It's mighty funny that this measure comes at a time when the Chinese are challenging the U.S. in the South China Sea. How the Chinese will laugh up their sleeves should they be planning to separate the U.S. Navy from its strategic oil reserve ahead of their invasion of Taiwan. It almost sounds like a plan. It might explain a recent retreat the Chinese made from its South China Sea aggressions -- a clever move to fool Old Joe that their interests are benign so the deal could go through.
Imagine shutting down the keystone XL pipeline, releasing the strategic petroleum reserve and buying it back from foreign countries at higher prices and in effect paying salaries of foreigners after you rendered thousands of Americans working at keystone XL jobless.— Rising serpent 🇺🇸 (@rising_serpent) November 23, 2021
Ultimately, it's a joke, an absurdity, a sorry bid to clean up after his own policies. As this Twitter denizen observes:
Biden’s dump of strategic petroleum reserves is spitting into a wind he created by attacking domestic energy production and handing leverage to OPEC and Russia.— Brian Brenberg (@BrianBrenberg) November 23, 2021
And those bad policies are what's coursing through the system, driving energy prices higher. Biden has:
Shut down the Keystone XL pipeline.
Given the go-ahead to Vladimir Putin to finish his pipeline with Germany, making that ally dependent on pleasing Putin who has repeatedly used oil as a weapon.
Shut down drilling on federal lands.
Demonized energy producers as price-gougers and other smears.
Begged OPEC to produce oil in the wake of his own energy shutdowns, something the sheiks have laughed in his face at.
Tammy Bruce sums the whole sorry scenario up well with this tweet:
The equivalent of tapping your savings to pay your rent because you spent your paycheck on drugs and lap dances. It’s not a solution, it’s forestalling a complete collapse. https://t.co/eo9Xy0YCWS— Tammy Bruce (@HeyTammyBruce) November 23, 2021
In short, Biden's energy solutions are the product of ignorance, bad policies, sorry decisions, and easily reversible with a return to President Trump's winning energy policies, which made gas cheap and America energy-dominant. Since Joe won't go back to those, the alternative is lose, lose, lose for America, there is no winning in this clown show.
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