Putin didn't cause gas price rise
To hear it from President Brandon, the current high cost of gasoline is all Vladimir Putin's fault. "Putin's gas hike!" is a common Brandon theme.
But it's all nonsense. Putin is actually responsible for very little of the cost of gasoline.
According to the U.S. Energy Energy Administration, the cost of gasoline was $2.096 a gallon on Election Day 2020. By Inauguration Day it had climbed to $2.334 a gallon. The date of the invasion of Ukraine was February 24; at that time the price had risen to $3.517 a gallon. Putin cannot be blamed for any price rises which occurred before the date of the invasion.
Since that time, it is true that the United States has embargoed Russian oil imports into the United States. However, this has had a minimal impact on the cost of gasoline because Europe has not embargoed Russian oil.
According to the Center for Strategic and International Studies, Europe has taken only baby steps to reduce its appetite for Russian oil and gas. Europe has announced, not one, but six packages of sanctions, and all fall woefully short of ending their import on Russian oil.
Europe's sanctions "will ban seaborne imports of Russian crude oil as of Dec. 5, 2022, and ban petroleum product imports as of February 5, 2023." Pipeline oil will not be interrupted. Delivery of Russian oil products to Europe therefore, as of this date, has not been affected by Russia's invasion.
We know many things about oil, and one of those things is its fungibility. In the end, the cost of oil is determined by supply and demand, nothing more. It doesn't matter where oil comes from; all that matters is its overall availability.
Russia is still adding its oil production to the world's markets. In addition to Europe, Russia now is selling discounted oil to China and India. This will result in less demand for oil from the Mideast, which frees up that oil for sale elsewhere.
"The drop in Russian exports in the past two months has been lower than expected" reports CSIS. In fact, to look at their bar graph, Russia's exports as of the end of April had actually risen from the previous September, from 33 million barrels a week to 35 million.
One could argue that the rise in the cost of gasoline would have been caused by an elimination of Russia's oil from the world's markets. But as we see, that oil hasn't been eliminated.
Also, consider the United States' own oil being introduced to the world's markets. It is as high now as it's ever been, thanks to Brandon's adding a million barrels a day for the next several months from the Strategic Oil Reserve.
Again according to the US Energy Information Administration, for the 12 months running from April 2019 to March 2020, the United States produced an average of 12.538 million barrels of oil per day. Then the China virus struck, and oil production fell sharply to 10.8 million per day. In the first three months of this year, it had partially recovered to 11.4 million barrels per day.
Now, add the 1 million barrels per day that Brandon has ordered released into the markets, and one sees that America currently is sending almost exactly the same amount of oil into the world markets as it did at the time of Trump's peak production. Never mind that this is an artificial stimulus which will end soon enough; all that matters is, right now, the oil is present in the markets.
So, if Russia's oil is still being sold, and America is currently selling as much as it ever did while Trump was President, and if OPEC oil is still being produced as much as it ever was -- then how can there be any shortage of oil to drive up prices?
Brandon's claim that the high cost of gasoline is Putin's fault simply will not do. It is ludicrous.
Image: Chris Yarzab.