Biden started going toe-to-toe with Big Oil on gas prices

The administration’s efforts to keep pump prices low underscore how intertwined gas prices and electoral fortunes are for the ruling party. They also illustrate how limited policy options are for the occupant of the White House.

Analysts say a combination of factors beyond the government’s control is driving up fuel prices. They include refinery outages in California and the Midwest, tightening European sanctions on Russia, supply and demand imbalances and OPEC’s recent decision to cut its oil output in defiance of the White House. So the White House has settled on a long-term strategy of arm-twisting — publicly ostracizing oil companies while privately pressuring their executives.

The attack comes as gas prices across the country rebounded and President Joe Biden brushed off weeks of declines as evidence that his economic policies were working. Although that trend has eased over the past few days, the long-term picture looks bleak, threatening officials who worry that price fluctuations could do eleventh-hour damage to Democrats’ midterm prospects.

“If you own it on the way up, you own it on the way down,” says Tobin Marcus, a former Biden adviser and current senior policy and political strategist at Evercore ISI. To do the best.”

The average price of gas is now $3.87 a gallon, up about 20 cents from a month ago. In a dozen states, prices have hit $4, an issue Biden allies see as particularly troubling as Democrats try to sell voters on an improving economy.

Biden and his advisers have pegged the political importance of gas prices on how they believe voters feel about the economy. In the absence of immediate policy fixes, they have turned their fire on the industry, attacking oil companies for making record profits and suggesting they can drive down gas prices alone, if not for their own greed.

See also  Pregnancy Stakes 2022 Competitors, Conflicts, Time, Horses, Choices, Predictions: The Legendary Expert in Breaking the Secret Pledge

In late September, Biden directly urged oil and gas companies to cut prices, accusing them of profiting from higher fuel costs, even as the global price of oil fell.

“Lower the prices you charge at the pump to reflect the cost you pay for the product,” he said. “Do it now. Not a month left. Do it now.”

Most recently, Energy Secretary Jennifer Granholm singled out oil giant ExxonMobil for protesting the administration’s demands that the industry limit exports overseas in favor of increasing supplies in the US.

“These companies need to focus less on taking every last dollar off the table and more on delivering savings to their customers,” Granholm said, adding that ExxonMobil “is misreading the moment we’re in.”

In a statement, White House spokesman Abdullah Hassan characterized the administration’s aggressiveness as “aimed at advancing the interests of the American people — whether that means asking the industry for their ideas or inviting them to set up” to increase oil and gas production. Profit margins should be recorded during the war.

Senior Biden officials — National Economic Council director Brian Deese and top State Department energy adviser Amos Hochstein — are privately more persistent, repeatedly urging industry representatives to find new ways to lower prices, people familiar with the discussions said.

While the administration has always kept an open channel to the industry, people familiar with the matter said conversations have grown blunt and often come of late — as officials increasingly believe companies can do more.

This has fueled opposition from the oil and gas industry, especially given the administration’s accelerated timeline that will do little to move prices in isolation. Energy market experts largely agree that prices are affected by a range of global dynamics and that companies cannot afford to produce more oil.

See also  APEC summit with Xi Jinping, Kamala Harris and other leaders

“You can scream all you want,” said Ryan Kellogg, an economist and professor at the University of Chicago’s Harris School of Public Policy. “There’s no switch you can flip that will immediately cause another bunch of oil to come out of the ground.”

But Biden aides are undeterred. Officials at both public and private companies have complained that oil refineries have been slow to restart facilities, putting pressure on them to ramp up production quickly once demand surged at the start of the pandemic. They have also focused on the time it takes for lower oil prices to translate into cheaper gas for consumers, arguing that energy companies and retailers should reflect savings when oil prices fall just as they raise prices when oil markets rise.

“We are not yet at pre-pandemic levels [of supply] And the demand is almost there,” said an Energy Department official involved in the talks, adding that persistently low inventories represent the heart of the administration’s frustration. “We really need to understand what’s holding the industry back.”

Although an administration official said there has been some pick-up in refinery restarts this year, the more aggressive turnaround has not produced measurable progress recently. But it has further strained the already frosty relationship between the administration and the oil industry. A senior industry official, who spoke on condition of anonymity to speak for the White House, questioned Biden aides’ understanding of energy markets. The person summed up management’s intense focus on daily price fluctuations as “asking the wrong questions and taking the wrong actions.”

Another industry official said that despite months of discussions, Biden and the industry have not shared any common ground on policies they believe will lower fuel costs.

See also  NASA lost two Tropics satellites in Astra rocket failure

“We appreciate the open engagement with the administration,” said Frank Macchiarola, senior vice president for policy, economics and regulatory affairs at the American Petroleum Institute.

Still, the approach has rattled some Democrats, who have long believed the White House should take a hard line with the oil industry on its exorbitant profits — a tactic they argued would help deflect voters’ frustration over gas prices that is fueling Biden himself.

Several Democratic lawmakers and California Gov. Gavin Newsom have called for taxing so-called windfall profits that oil companies make from higher prices.

Representative Ro hon (D-Calif.), an early advocate of the windfall tax, told POLITICO that he is now working on a bill to limit refined gasoline exports after the Biden administration showed it was open to the idea.

The White House has yet to fully embrace a windfall profits tax or export ban, both of which represent major interventions that experts and some officials worry could raise prices by upsetting oil markets and the delicate geopolitical landscape. Aides are wary, for example, that curbing exports could hurt European allies already facing higher energy costs due to sanctions on Russia.

Even if it doesn’t translate into new policy or result in a measurable drop in gas prices, the potential political payoff is worth Democrats keeping pressure on the oil industry.

“Between now and the finish line of the midterms they’re trying not to make it any worse than it has to be as a political thing,” Marcus said. “Political stories work best when there’s an identifiable villain.”

Ben Lefebvre contributed to this report.

Leave a Reply

Your email address will not be published.