Tag Archives: gasoline prices in the US

A New Level Of Spin

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On Friday, Ed Morrissey posted an article at Hot Air about the recent decline in gasoline prices. The article illustrates the spin the mainstream media is trying to put on the current price of gasoline. Although some of us a grateful for the recent decline in prices, most of us are also aware that gasoline prices averaged $2.379/gallon on January 21, 2021 (source here).

The article reports:

Nevertheless, CNN’s Chris Isidore wants us to celebrate the $100 per month “raise” we’re all getting at the pump, courtesy of The Most Beneficent Majesty of Joe Biden:

Next time you stop at a gas station, think of it as a $100-a-month tax cut. Or a maybe $100-a-month raise.

The steady drop in gas prices over the last few months has turned into an unexpected form of economic stimulus, coming at a time when the Federal Reserve is trying to cool the economy and battle rising prices with higher interest rates.

Since hitting a record of $5.02 a gallon on June 14, the national average price for regular gas is down $1.10, or 22%, to $3.92, according to AAA. That average has now fallen for 67 consecutive days.

Since the typical US household uses about 90 gallons of gas a month, the $1.10 drop in prices equals a savings of $98.82.

You can believe that after the mid-term elections the Biden administration will not care what the cost of gasoline is. It will probably rise back up to $4.00 a gallon or more and then magically decrease to about $3.50 just before the 2024 election. That is how things work in Washington.

The article at Hot Air concludes:

Furthermore, the price didn’t drop because the Biden administration brought massive new supplies into the market. The prices dropped due to a fall in demand for gasoline as it got too expensive for American consumers to use on vacations and other non-essential travel. That indicates an economic contraction on the way, not a pay raise.

This argument gets almost obscene when we consider what’s happened to Americans’ disposable income over the Biden presidency and the inflationary wave Biden created. For five straight quarters, real disposable personal income — adjusted for inflation — has fallen in a compounding series of buying-power setbacks for Americans. As I wrote the week before last:

In fact, with the exception of the massive sugar high of Biden’s American Rescue Plan stimulus, real disposable personal income — which is adjusted for inflation — has been in negative territory throughout Biden’s presidency. Those numbers are comparisons to the previous quarter, too, which means that this has a compounding effect. The most recent read of -0.5% on real disposable income is not from a baseline but shows a decline from the previous quarter’s -7.8%, which was a decline from the previous quarter, and so on.

In other words, Q2’s -0.5% wasn’t an improvement. It merely showed that the rate of decline slowed, but that real disposable personal income was still declining.

That’s what CNN has the cojones to describe as a pay “raise” in its economic “analysis.” It’s breathtaking in its intellectual dishonesty.

This is only one example of what we should expect to see as we enter the political silly season.

It Hasn’t Worked Yet

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On Sunday, The Daily Caller reported that the three times that President Biden has released fuel from the Strategic Petroleum Reserve the price of gasoline has gone up. I don’t think his solution is working.

The article reports:

Biden ordered a 50-million-barrel SPR release in November, a 30-million-barrel release on March 1 and a 180-million-barrel release on March 31, saying the “historic” actions would ease pressure felt by Americans at the pump. But marketplace and government data analyzed by The Daily Caller News Foundation paint a different picture.

On Tuesday, the average price of gasoline reached an all-time high of $4.59 per gallon, according to AAA data, while domestic oil prices remained above $110 a barrel, far higher than their 2015-2021 average of $53.15 per barrel and 2021 average of $68.14 a barrel, Federal Reserve data showed.

Release 1: Nov. 23, 2021

Oil price: $76.75 a barrel.

Gasoline price: $3.40 per gallon.

The article concludes:

Finally, Biden announced the largest release to date on March 31, ordering the DOE to release 180 million barrels of oil from the SPR between April-September. The president said the move would provide a “historic amount of supply for a historic amount of time” and act as a “six-month bridge” to the fall.

“The action I’m calling for will make a real difference over time,” he said during remarks titled “Actions to Lower Gas Prices at the Pump for American Families.”

Biden then predicted gas prices would fall 10-35 cents a gallon.

However, the price of oil declined substantially from $107.82 a barrel on March 30 to $100.28 per barrel on March 31. Oil prices remained near that level through April and early May before increasing again and hitting $114.20 per barrel on May 16.

Gasoline prices followed a similar trajectory as oil prices, declining through April before skyrocketing in mid May and hitting multiple all-time highs.

Those of us who studied economics at some point are familiar with the law of supply and demand. Most Americans understand that if the government opens up drilling in America, we can again be energy independent and enjoy the benefits of that independence. Aside from lower prices at the gas pump, businesses are more likely to relocate to places that have cheap, dependable energy. We saw that during the Trump administration. The Biden administration’s war on fossil fuel has cost Americans dearly at the gas pump, in international relations, and in the ability to attract manufacturing jobs to America. The Biden administration is destroying America’s middle class and the American economy in the name of an industry that has not yet been proven to work. As Americans face rolling blackouts this summer, I hope many of them will reconsider some of their recent voting habits.

Very Few People Actually Believe This

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The Biden administration has continually passed off the rapidly rising gas prices as “Putin’s price hike.” This description ignores the fact that gasoline prices began rising steadily right after President Biden took office. On Friday, The Daily Caller posted an article about the real cause of the rising gasoline prices.

The article reports:

The White House often describes higher prices at the pump as “Putin’s price hike,” but prices were going up steadily after President Joe Biden took office. The price already increased by 55%, rising from a U.S. average of $2.11 when Biden took office to $3.51 the day before Russian President Vladimir Putin decided to invade Ukraine, according to Forbes.

“The ‘Putin’s price hike’ is laughable – and you can tell because no matter how hard they try to advance this particular little bit of propaganda absolutely nobody but White House spokespeople use the word,” John Cochrane, a Hoover Institution senior fellow, told the Caller.

“The administration wants to blame anybody but itself for the challenges of the American economy. [‘Putin’s price hike’ is] a good talking point because there’s a sliver of truth in it,” President of the American Institute for Economic Research, William Ruger, told the Caller in an interview.

The current U.S. average price of gas sits at $4.59 per gallon and prices in California have reached as high as $7.25 per gallon.

The article notes that although inflation is part of the problem, the problem is also due to the Biden administration’s war on oil and gas.

The article notes:

“At least early on in the price run-up, drilling activity was comparatively muted. Cancelled leases, cancelled pipelines, proposed regulations to penalize lenders that financed fossil-energy businesses all dampened production responses that would be putting oil and gas on the market today,” Kreutzer said.

…Biden stymied future production of gasoline by canceling the Keystone XL oil pipeline, halting the sales of a drilling area in Alaska and two in the Gulf of Mexico, and banning new oil and gas leasing on public lands.

“If the global supply of oil is low, we should ask who canceled the Keystone Pipeline on his first day in office, why fracking is banned in many states, and so forth. Hobbling U.S. energy investment has been the deliberate policy of the administration from the first day in office,” Cochrane said.

“The administration should have accelerated approval of pipeline permits, instead of blocking and cancelling them. It should not have cancelled leases that had already been issued. It should not be using regulatory agencies like the Security and Exchange Commission and appointments at the Federal Reserve to hobble investment in oil and gas production,” Kreutzer (Institute for Energy Research senior economist David Kreutzer) said.

Elections matter, and energy policies matter.

The Economic Cost Of Giving Up Energy Independence

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One of the accomplishments of the Trump administration was bringing America to a place of energy independence. The policies that led to energy independence were immediately reversed (via executive order) by the Biden administration. Americans have seen the results of that reversal in the form of higher gasoline prices at the pump and an increase in the cost of heating and cooling our homes.

Yesterday CNBC reported that U.S. oil benchmark West Texas Intermediate crude futures traded as high as $76.98, a price not seen since November 2014.

The article notes:

Oil jumped to its highest level in six years after talks between OPEC and its oil-producing allies were postponed indefinitely, with the group failing to reach an agreement on production policy for August and beyond.

On Tuesday, U.S. oil benchmark West Texas Intermediate crude futures traded as high as $76.98, a price not seen since November 2014. But by 11 a.m. on Wall Street those gains were erased, and the contract for August delivery dipped $1.60, or 2.1%, to trade at $73.56 per barrel. Brent crude hit its highest level since late 2018 before also reversing gains, and last traded 3.1% lower at $74.77 per barrel.

The article concludes:

Oil’s blistering rally this year — WTI has gained 57% during 2021 — meant that ahead of last week’s meeting many Wall Street analysts expected the group to boost production in an effort to curb the spike in prices.

“With no increase in production, the forthcoming growth in demand should see global energy markets tighten up at an even faster pace than anticipated,” analysts at TD Securities wrote in a note to clients.

“This impasse will lead to a temporary and significantly larger-than-anticipated deficit, which should fuel even higher prices for the time being. The summer breakout in oil prices is set to gather steam at a fast clip,” the firm added.

Wouldn’t it be nice if we were not dependent on the whims of OPEC.

 

A Surefire Way To Increase The Price Of Gas

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Yesterday CNS News posted an article about the White House’s plan to end the tax breaks oil companies currently receive. Obviously, this will increase the tax burden on the oil companies. As I have previously stated–corporations don’t pay taxes–they simply pass them on to the consumer. Guess what? This is a recipe for even higher gas prices at the pump.

The article reports:

“From our perspective, it’s a fairness issue,” Zichal (Heather Zichal, deputy assistant to the president for energy and climate change) said. “At a time when we’re making difficult decisions about the budget and where to make investments and where to cut, the fact that oil and gas companies are making record profits and at the same time getting $4 billion in subsidies annually, those subsidies should be repealed. The president has called for that, and I believe the Senate will be acting to vote on this as well.”

What about fairness to the consumers who need to gas to get to work?

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