About That “Bidenomics” Thing

On Monday, The Independent Journal Review posted an article about rising gasoline prices.

The article reports:

Gas prices have quietly been on the rise over the summer as President Joe Biden and his administration have touted the merits of his “Bidenomics” agenda.

U.S. oil prices jumped by nearly 4% last week, and the per-gallon price at the pump hit a national average of $3.75 Monday, the highest recorded average since November 2022, according to AAA and the U.S. Energy Information Administration. Continued increases may pose a new headache for Biden, who is promoting the “Bidenomics” agenda ahead of his 2024 run for reelection.

Global oil prices are up 16% since late June, and they have increased for each of the past five weeks, according to CNN. Prices may only continue to rise in August and September as Saudi Arabia, Russia and other OPEC+ members undertake production cuts equivalent to about 1.5% of global supply, announced in early July.

The price increase is partially due to the actions of OPEC (The Organization of the Petroleum Exporting Countries) which has cut its production, but that cut is also due to the fact that America is no longer respected enough to be able to negotiate to prevent that cut and that America is no longer energy independent. Had we maintained our energy independence, the cut would not have had much impact.

Some of us remember the gas lines of the 1970’s. Energy independence will prevent those gas lines from happening again. It is unfortunate the the Biden administration did not understand the need to continue America’s freedom from the whims of OPEC.

 

Lying Or Simply Not Knowing?

On Thursday, The U.K. Daily Mail posted an article about a recent speech by President Biden.

The article reports:

President Joe Biden touted U.S. manufacturing gains Thursday on a trip to Syracuse – where he claimed gas prices were down compared to when he took office, when in fact they are higher.

‘We’re down $1.25 Since the peak this summer, and they’ve been falling for the last three weeks as well as well, and adding up real savings for families today.,’ Biden said. 

‘The most common price of gas in America is $3.39 down from over $5 When I took office,’ he continued.

The average cost of a gallon of gas on the AAA site was $3.76 Thursday. When he took office, it was averaging $2.39 – or about half what he said it was then – according to the Energy Information Institute.

President Biden has a very shaky relationship with the truth. Remember how the political left was always accusing President Trump of lying? Somehow that hasn’t happened to President Biden, even when he is lying.

Yahoo News recently fact-checked another of President Biden’s statements:

Joe Biden: “wages have gone up higher, faster than inflation”

PolitiFact’s ruling: Mostly false

Here’s why: President Joe Biden defended his record on the U.S. economy while attending the international climate change conference in Glasgow, Scotland.

Biden entered the United Nations’ COP 26 summit facing supply chain challenges and high levels of inflation back home. At a press conference, he said the U.S. is still in a better place than a year ago, when the coronavirus pandemic limited family gatherings and hampered the economy.

“This Thanksgiving, we’re all in a very different circumstance,” Biden said on Nov. 2. “Things are a hell of a lot better, and the wages have gone up higher, faster than inflation.”

On inflation and wages, Biden has a point for the most recent two months — August and September 2021. However, inflation outpaced wages by so much earlier in his presidency that these two months haven’t changed the overall picture much. All told, Americans are worse off on the comparison of inflation and wages than they were roughly a year ago. (The White House did not respond to an inquiry for this article.)

At least someone is noticing the lies.

Making A Bad Situation Worse

As of April of this year, California had the highest gasoline taxes in the nation [51 cents per gallon (article here)]. Now Governor Newsom is going to do something that will increase the pain at the pump for Californians.

On Sunday, Townhall reported:

Just when Californians thought they were getting a break on high gas prices, they shot up again, hitting $7 in some areas. 

Gov. Gavin Newsom (D-Calif) called for an emergency session of the state legislature to propose a tax that will rip off what he calls the “greed of oil companies.” 

“I’m calling for a Special Session to address the greed of oil companies. Gas prices are too high,” Newsom tweeted, adding “time to enact a windfall profits tax directly on oil companies that are ripping you off at the pump.” 

The oil companies are not ripping you off at the pump. The higher gasoline prices are caused by the Biden administration’s war on fossil fuel and by The Organization of the Petroleum Exporting Countries (OPEC) deciding to reduce production in order to keep prices high. The Biden administration has done what it could to limit lending to oil companies while also limiting their ability to drill for oil. It has also stopped pipelines that cheaply and safely move oil from one place to another. The rise in prices at the gas pump are simply a reflection of the economic principle of supply and demand. Governor Newsom either never studied economics or chooses to ignore what he learned.

Remember, corporations do not pay taxes–their customers do.

The article notes that the Governor was mocked on Twitter for wanted to raise the tax on oil companies. At least some people on Twitter understand the economics of the issue.

The article concludes:

Meanwhile, California Assembly GOP leader James Gallagher and Vince Fong, the Assembly Budget Committee vice chair argued for Newsom to not call for the special session. 

They said that lawmakers should suspend the state’s gas tax if the governor does take this action. 

Stay tuned.

Prepare For Gas Lines

In the 1970’s we had gas lines. Part of the problem was our reliance on oil from the Middle East and part of the problem was the government’s efforts to keep the cost of gasoline down. Those efforts together created the perfect storm. To put things in perspective, in 1969 a gallon of gas cost $.35 or $2.75 in today’s dollars (according to dollartimes.com). In 1978, a gallon of gas cost $.65 a gallon or $2.99 inflation adjusted (according to CNBC). By 1981, the cost was $1.35 a gallon or $4.46 inflation adjusted (CNBC). With the exception of 2011-2014, gasoline has generally stayed between $2 and $3 a gallon. Right now the price is over $4 a gallon, and obviously that impacts everything Americans buy. The Biden administration desperately wants to lower the price of gasoline before the mid-terms. However, there is some disagreement as to how to do that. The easiest way would be to open up drilling in America and bring back our energy independence, but considering who the Biden administration is beholden to, that is highly unlikely. So we are left with more risky solutions.

On Monday, The Daily Caller posted an article about one suggested solution.

The article reports:

Several economists slammed a Democratic proposal making its way through Congress that would enable energy price controls amid record high fuel costs.

Such a policy, which prohibits private companies from increasing prices regardless of market conditions, would have catastrophic consequences including energy supply shortages and increased inflation, the economists argued in a series of interviews with The Daily Caller News Foundation. Democrats have alleged in recent weeks that inflation is being driven by corporate price gouging and that Big Oil is using the Ukraine crisis as cover to raise prices and boost profits.

Oil is a commodity. It is subject to supply and demand. When America drastically decreased the amount of oil it was producing (under the Biden administration) and the amount of fossil fuel it was exporting, the supply shrank and the cost went up. The war in Ukraine did not help, but the problem was there before the war.

The article continues:

“I just can’t believe they’re dumb enough to do this,” Benjamin Zycher, an economist and senior fellow at the American Enterprise Institute, told TheDCNF in an interview.

“If prices are controlled at below-market clearing levels, then you get shortages because the quantity demanded is greater than the quantity supplied at the legal maximum price,” he continued. “And that’s why you get gasoline lines and allocation controls.”

The House Rules Committee announced that it would review the Consumer Fuel Price Gouging Prevention Act — a bill that enables the president to issue an emergency declaration banning energy prices issued in an “excessive or exploitative manner,” according to its sponsors — on Monday before reporting it to the floor. House Speaker Nancy Pelosi, who told reporters last week that oil and gas companies were exploiting consumers, promised that there would be a floor vote on the legislation this week.

The article concludes:

Economists, meanwhile, have also rebuked the argument that oil companies are price gouging amid the Ukraine crisis.

“[Retail gas stations] don’t necessarily drop their price as rapidly as what wholesale prices and oil prices are doing,” Garrett Golding, a business economist tasked with analyzing energy markets at the Federal Reserve Bank of Dallas, told TheDCNF in an interview. “Some people want to call that price gouging because it’s not in lockstep with where wholesale prices are. But the fact of the matter is, what they’re doing is making back the money that they were losing on the way up and that’s how they stay in business.”

Golding and fellow Dallas Fed economist Lutz Kilian published a May 10 paper laying out why gasoline prices haven’t risen and fallen in lockstep with oil prices over the last few months. They said pump prices are also affected by operating expenses such as rent, delivery charges and credit card fees, and that prices are set by retail gas stations, not oil drillers.

Democratic Reps. Kim Schrier and Katie Porter, the sponsors of the Sponsors of the Consumer Fuel Price Gouging Prevention Act, and Pelosi didn’t immediately respond to requests for comment from TheDCNF.

Democratic Massachusetts Sen. Elizabeth Warren introduced similar legislation Thursday that would implement a federal ban on “unconscionably excessive price increases.” House Democrats, led by Illinois Rep. Jan Schakowsky, unveiled a companion to Warren’s legislation.

Democrats are not likely to let facts get in the way of increasing federal control over our lives.

Some Perspective On Gasoline Prices

Issues & Insights recently posted an article about some of the behind the scenes aspects of the rapidly rising gas prices.

The article notes:

That gasoline prices are becoming unaffordable to many Americans is becoming old news. What got us here, though, is a story unheard by much of the public. It starts and ends with green politics.

As gasoline reaches prices that made it a luxury good during President Joe Biden’s year in office, the White House is considering asking the Saudis to produce more oil. At the same time, the administration apparently wants more oil from Venezuela, which is languishing under a dictatorship that’s squarely aligned with Russian President Vladimir Putin, and Iran, a member in good standing with the axis of evil.

“Joe Biden is frantically searching the globe to see if anyone but Texas might have some spare oil,” says a tweet from Bryan Dean Wright, a former CIA officer and Oregon Democrat, that sums up well the comical blundering as well as the corrupt decision-making of the current White House.

The article concludes:

But green politics won’t allow the U.S. to take advantage of its bounty of crude and natural gas. Oddly, though, the environmentalists who hold energy policy hostage when Democrats are in power have no problem with this country importing oil from nations where the drilling and transportation processes are dirtier than they are in the U.S., and the regimes are not democratically elected.

This is the California model. Officials and activists’ rush to create an all-renewables electricity grid has forced the state to import energy from producers in Arizona, Baja California, Colorado, Mexico, Nevada, New Mexico, Texas, and Utah that rely on natural gas, nuclear energy, and coal, three sources that California wants to eliminate from its portfolio. But this is acceptable, because it’s happening somewhere else, outside the view sheds of the wealthy enclaves on the coast.

It’s the same with the mining of the natural resources that are needed to build batteries for electric cars, cell phones, and other modern conveniences. The political left is happy to use these items as long as the extraction for material used in their manufacture is done away from their myopic gazes in countries where environmental protections hardly exist.

Yes, this not-in-my-back yard attitude is hypocritical, but worse than that, it produces poor public policy. We hope some day a majority of voters consistently figures this out in election after election.

Green energy destroyed the Spanish economy and did not lower carbon emissions (article here). Let’s not do that in America.

Following The Money

On Monday, Breitbart reported that Senator Catherine Cortez Masto (D-NV) took thousands of dollars in campaign donations from lobbyists for the Russian Nordstream 2 pipeline. At the same time, Senator Masto consistently opposed legislation that would allow America to continue being energy independence.

The article notes:

Cortez Masto is directly financially connected to the whole thing through campaign donations. According to FEC filings and disclosures, Vincent Roberti donated the legal maximum of $5,800 to Cortez Masto in March of 2021. Roberti represents many global companies, such as Valero Energy. Roberti Global has disclosed $8.5 million in fees lobbying for the Nordstream 2 pipeline.

Cortez Masto is among some of the Democrat Senators who have proposed a federal gas tax holiday instead of reducing dependence on foreign energy. Some believe a federal tax holiday will have little impact in Nevada.

Former Nevada attorney general Adam Laxalt is running against Senator Cortez Masto.

Attorney General Laxalt recently stated the following in a press release:

Prices were already going up before the Ukraine crisis and are likely to rise even further, but Cortez Masto has put green politics before the people. Independence from Russian oil and gas through American energy independence is an economic and national security imperative and Cortez Masto’s decision to handicap our production at home empowers Russia and hurts families across our state. I call on Catherine Cortez Masto to immediately reverse her opposition to the Keystone XL Pipeline, support drilling and hydraulic fracturing on federal lands, and end her senseless opposition to exploring energy resources in ANWR.

If gasoline prices continue to climb (which I believe they will), this Senate seat could easily flip.

 

The Quest For Freedom

Hong Kong protests have been in the news for a while, but there is not a lot being written about what is currently happening in Iran. The protests in Iran are the largest since the protests nine years ago. This time the protesters know that America is cheering for them.

Yesterday Paul Mirengoff posted an article at Power Line about the protests in Iran.

The article reports:

The New York Times reports on the protests against Iran’s repressive regime. It calls them the most intense since 1979. The 1979 protests, of course, led to the overthrow of the Shah.

The mullahs were the target of strong protests in 2009. But the Times supplies evidence that the current wave is even more intense.

The 2009 protests are believed to have resulted in 72 deaths over a period of many months. The current protests have led to 180 to 450 deaths in just four days.

More significantly, the nature of the protesters appears to be different. Students led the 2009 protests. Reportedly, the current protesters are mainly unemployed or low-income men between the ages of 19 and 26, and the protests are centered not at universities but in working class neighborhoods.

This makes sense because the current protests were triggered by economic grievances, especially an increase in gasoline prices. The Times acknowledges that the Trump administration’s sanctions against Iran are “a big reason” for the economic squeeze.

The difference in the nature of the protests is significant because unemployed and low-income youths have less to lose than university students. They are less likely to cowed for long.

The article states that it is doubtful that this protest will lead to an overthrow of the mullahs, but it may be a step toward that end.

Finding Our Way To Energy Independence

On November 21, Bloomberg posted an article about U. S. oil production and the opening of new pipelines in Texas.

The article reports:

An infestation of dots, thousands of them, represent oil wells in the Permian basin of West Texas and a slice of New Mexico. In less than a decade, U.S. companies have drilled 114,000. Many of them would turn a profit even with crude prices as low as $30 a barrel.

OPEC’s bad dream only deepens next year, when Permian producers expect to iron out distribution snags that will add three pipelines and as much as 2 million barrels of oil a day.

…The U.S. energy surge presents OPEC with one of the biggest challenges of its 60-year history. If Saudi Arabia and its allies cut production when they gather Dec. 6 in Vienna, higher prices would allow shale to steal market share. But because the Saudis need higher crude prices to make money than U.S. producers, OPEC can’t afford to let prices fall.

The article includes the following chart:

American energy independence creates a major geopolitical shift. We are still dependent on the Saudis to make sure that oil is traded in American dollars, but we are no longer dependent on them to keep our cars moving and our homes heated. Those of us old enough to remember the oil crisis of the 1970’s remember gas lines and rapidly increasing prices. I realize that we will never get back to 30 cents for a gallon of gasoline, but it is nice to see gasoline prices hovering in the mid two-dollar range rather than the four-dollar range.

Some Good News For Commuters

USA Today posted an article yesterday about gasoline prices. I just got back from California where the price of a gallon of gas was about $4. It’s really good to be back in North Carolina!

The article reports:

Gas prices are expected to plunge sharply in the final days leading up to the midterm elections, potentially nearing $2 a gallon at some stations in low-tax states.

The sudden respite at the pump comes from sharply lower oil prices and declining wholesale gasoline prices.

Oil Price Information Service analyst Tom Kloza said it could amount to a “colossal collapse” in prices for consumers: from a $2.78 national average on Friday to as low as $2.50 by Tuesday.

“There’s the possibility you could see some prices flirt with $2 a gallon in the next 10 days or so in some of the low-tax areas,” Kloza said. “For now it’s going to be a great break.”

The break comes after gas approached four-year highs in October, topping a national average of $2.90 a gallon at one point.

Prices have already fallen by 6 cents per gallon over the last week, according to AAA. But they remain 27 cents higher than a year ago.

The increase in gasoline prices was one of the factors in the housing bubble collapse in 2008. In four years, the price of a gallon of gasoline had gone from an average of $1.85 a gallon to an average of $3.25 a gallon. If you commute thirty miles to work, that could mean as much as $3.00 a day added to the cost of your commute plus the cost of any recreational driving. To some people working with a tight budget, the increase was the difference between being able to pay the mortgage and not being able to pay the mortgage.

The article continues:

U.S. oil prices have fallen about $13 per barrel from their October high, trading at around $63 on Friday morning.

One key reason: Rising oil production throughout the world is causing stockpiles to build up.

The Organization of the Petroleum Exporting Countries’ output has reached a two-year high, with leading OPEC member Saudi Arabia’s output “near its all-time high,” Jefferies analyst Jason Gammel said in a research note. American oil output has also spiked.

“This surge has driven the market into oversupply,” pushing prices lower, Gammel said.

A decrease in gasoline prices is good news for all consumers.

Why Energy Independence Matters

The Washington Times posted an article today about Iranian military exercises in the Straits of Hormuz. The Straits of Hormuz is significant because 35% of all seaborne traded oil, or almost 20% of oil traded worldwide flows through the Straits of Hormuz. This is something to watch as the situation in Iran becomes more volatile.

This is today’s Dry Bones cartoon:

The Washington Times reports:

Iran’s navy sent dozens of small boats into the Strait of Hormuz on Thursday, dramatizing its ability to choke off the strategic Persian Gulf waterway — a move that could send global oil and U.S. gasoline prices soaring — and escalating the confrontation with the Trump administration for withdrawing from the 2015 nuclear deal.

U.S. officials said the naval exercise was Tehran’s way to show its capability to create a disruption in the waterway, through which some 30 percent of the world’s sea-transported oil passes daily. Officials at the Pentagon said they expected the exercise would last only a few hours, although it was unclear Thursday night whether it had ended.

“We are monitoring it closely, and will continue to work with our partners to ensure freedom of navigation and free flow of commerce,” said a statement by Navy Capt. Bill Urban, U.S. Central Command spokesman.

The development marked Iran’s latest escalation in response to Mr. Trump’s promise to begin reimposing harsh economic sanctions in the coming days that were suspended under the 2015 deal. One Pentagon source said the unexpected Iranian navy moves were meant to hammer home Tehran’s rejection of President Trump’s offer this week for direct, unconditional talks with Iranian President Hassan Rouhani.

The article details the unrest in Iran:

It is an increasingly delicate moment for Mr. Rouhani, who faces protests in Iran over the nation’s struggling economy, weak growth and declining currency.

The Rouhani government has been rocked by a string of protests in cities across the country over the failing currency, mismanagement and investor fears of U.S. sanctions, the first wave of which is set to begin Tuesday. The Trump administration is pressuring Iran’s other trading partners in Europe and elsewhere to curb trade and investment ties as well.

A report by the official IRNA news agency said about 100 people took to the streets Thursday in the northern city of Sari and that demonstrations broke out in at least three other cities. The agency reported that none of the protests had official permission and all were broken up by police.

Iranian dissident groups abroad have detailed multiple demonstrations in recent days, with harsh police crackdowns in response. The Associated Press cited videos circulating on social media purporting to show dozens of demonstrators setting fire to police vehicles and shouting “death to the dictator.” The authenticity of the videos could not immediately be verified.

One way for a dictator to unite his people is to unite them against a common enemy. This may or may not work in Iran since many of the younger people in the country are more inclined toward western ideas than the ideas of the mullahs.

The article concludes:

“Any disruption of oil supplies in the Persian Gulf would be a major threat to the global economy and would hurt U.S. trading partners, thereby damaging the U.S. economy,” said Amy Myers Jaffe, who heads the Program on Energy Security and Climate Change at the Council on Foreign Relations.

U.S. domestic oil and gas production and export increases in recent years “have not reduced the U.S. need to police the free flow of oil from the Middle East,” Ms. Myers Jaffe wrote in an analysis for the think tank this week. “An oil price rise due to the loss of supply in one part of the world is reflected in U.S. price levels as well all other locations across the globe.”

Rockford Weitz, who heads the Fletcher Maritime Studies Program at Tufts University, said that in the Strait of Hormuz, Iran “could damage commercial shipping with relatively cheap anti-ship missiles, fast patrol boats, submarines and mines.

“Even threats and modest disruption to commercial shipping could trigger economic damage in the form of higher marine insurance rates, crude oil supply concerns and unsettled stock markets,” Mr. Weitz wrote in an analysis published by Tufts last month.

We live in a fragile world–keep praying.

They Were For It Before They Were Against It

On Thursday, Investor’s Business Daily posted an article about the rising price of gasoline. It is becoming obvious that the Democrats plan to blame President Trump for the increased cost and use the issue in the 2018 mid-term elections. Well, not so fast.

The article reminds us that in the past the Democrats have supported increasing gasoline prices in the name of the phony science of global warming.

The article reminds us:

Sen. Minority Leader Charles Schumer and other Democrats plan to use this price spike to blast President Trump and, hopefully, improve their election chances in November.

“President Trump’s reckless decision to pull out of the Iran deal has led to higher oil prices,” Schumer said. “These higher oil prices are translating directly to soaring gas prices, something we know disproportionately hurts middle and lower income people.”

But Schumer, as well as the reporters covering him, should know that the high gas prices are the result of three factors that are beyond Trump’s control.

One is the fact that OPEC has tightened its production quotas to counter the huge increase in U.S. oil production thanks to the fracking revolution. Trump has been trying to boost production still more.

So what have Democrats said about gasoline prices in the past? The article reports:

As recently as 2015, Democrats were pushing to nearly double the federal gasoline tax. At the time, House Minority Leader Nancy Pelosi said that it was the perfect time to do so because “if there’s ever going to be an opportunity to raise the gas tax, the time when gas prices are so low — oil prices are so low — is the time to do it.”

Democrats in California pushed through a 12-cent-per-gallon hike in the state’s gas tax last year that Republicans are vowing to roll back if they can.

…At the same time, Democrats have pledged to impose a tax on carbon emissions of around $50 per ton of CO2 — which would go up each year at a rate faster than inflation — to combat “climate change.”

Schumer himself promised to enact a carbon tax if Hillary Clinton won and Democrats regained control of the Senate in the 2016 elections.

Well, guess what? A carbon tax of that magnitude would sharply raise gasoline prices. A report out of the University of Michigan last fall concluded that a carbon tax of $40 per ton would hike gasoline prices by 36 cents a gallon.

Higher gasoline prices impact everyone who drives a car, a truck, or a motorcycle, whether they are rich or poor. To people who depend on their car to get them to work every day, the increased price of gasoline can mean the difference between taking a family vacation or staying home. It can mean the difference between taking the family out to dinner occasionally or eating at home. Financially and mentally, the price of gasoline matters. It is unfortunate that rather than work with the President to help bring the price of gasoline down and bring financial relief to Americans, the Democrats are choosing to make gasoline prices a political issue.

Are You Enjoying The Current Price Of Gasoline?

On Sunday, Stephen Moore posted an article at The Daily Signal about the recent decline in gasoline prices. The article reminds us that in June, oil reached a peak price of $103 a barrel. Since then, the price has dropped 25 percent. American motorists are seeing the results of that drop in gasoline prices at the pump that have dropped below $3.00 per gallon. At their present levels, gasoline prices are saving American consumers and businesses $200 billion a year.

The article reports:

Oil prices are falling because of changes in world supply and world demand. Demand has slowed because Europe is an economic wreck. But since 2008 the U.S. has increased our domestic supply by a gigantic 50 percent. This is a result of the astounding shale oil and gas revolution made possible by made-in-America technologies like hydraulic fracturing and horizontal drilling.  Already thanks to these inventions, the U.S. has become the number one producer of natural gas. But oil production in states like Oklahoma, Texas and North Dakota has doubled in just six years.

Without this energy blitz, the U.S. economy would barely have recovered from the recession of 2008-09. From the beginning of 2008 through the end of 2013 the oil and gas extraction industry created more than 100,000 jobs while the overall job market shrank by 970,000.

President Obama, you didn’t build this recovery (such as it is)–it happened in spite of you! The energy blitz in America is breaking the back of OPEC. They can no longer blackmail western countries with threats of cutting off their oil supply.

The article further reports:

Yet the political class still doesn’t get it. As recently as 2012 President Obama declared that “the problem is we use more than 20 percent of the world’s oil and we only have 2 percent of the world’s proven oil reserves.”  Then he continued with his Malthusian nonsense,  “Even if we drilled every square inch of this country right now, we’d still have to rely disproportionately on other countries for their oil.” Apparently, neither he nor his fact checkers have ever been to Texas or North Dakota.  And we don’t have 2 percent of the world’s oil. Including estimates of onshore and offshore resources not yet officially “discovered”, we have ten times more than the stat quoted by the president–resources sufficient to supply hundreds of years of oil and gas.

If the President and his Democrat allies would get out of the way, the American economy would recover. Please remember that when you vote next week.