With the average price for a gallon of gas nationally setting a new record for its highest price, Democrats are getting nervous about the political ramifications months away from the 2022 midterm elections.
According to Axios, Democrats are “scurrying to limit the political damage from high gasoline prices” and want to drag the CEOs of oil companies up to Capitol Hill to harangue them about high prices and accuse them of artificially increasing prices.
Apparently, they realized that blaming the price hike on Russian President Vladimir Putin, and calling it “un-American” to blame anyone else, was not a winning strategy. So now they’re back to blaming greedy, evil corporations.
Senate Majority Leader Chuck Schumer (D-N.Y.) claimed on the Senate floor on Wednesday that there is a “bewildering incongruity” between gas prices and the price of crude oil, which decreased in recent days, and insisted it “smacks of price gouging.”
Meanwhile, House Energy and Commerce Chairman Frank Pallone (D-N.J.) invited oil company CEOs to testify before his panel about the high prices and accused them of using Russia’s invasion of Ukraine to “keep prices artificially high and increase their own profits.”
President Joe Biden also got in on the action of accusing oil companies of being greedy, as he tweeted, “Oil prices are decreasing, gas prices should too. Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31. Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.”
He also shared a graph that showed the price of oil compared to the price of gas at the pump. It showed oil prices spiking shortly after Russia invaded to over $120 a barrel and then following to below $100 a barrel. Meanwhile, gas prices hovered around $4.30.
Oil prices are decreasing, gas prices should too.
Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31.
Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans. pic.twitter.com/uLNGleWBly
— President Biden (@POTUS) March 16, 2022
Former Obama economic adviser Jason Bordoff called out the Democrats’ decision to accuse oil companies of padding profits and explained that its normal for gas prices at the pump to be high for a while even as oil prices decrease.
“Gas prices will fall; it just takes a little time. There’s a long economics literature explaining ‘rockets & feathers’–why gasoline prices go up faster when oil price rises than they fall when oil price drops,” Bordoff wrote.
Gas prices will fall; it just takes a little time. There's a long economics literature explaining "rockets & feathers"–why gasoline prices go up faster when oil price rises than they fall when oil price drops. https://t.co/P6H3wHiZEQ
— Jason Bordoff (@JasonBordoff) March 16, 2022
However, The Washington Post’s Glenn Kessler points out that a perceived hostility to oil “can have an effect of shaping market perceptions that on the margins can affect prices.”
Still, oil is a global market, and even if the U.S. maxed out its production it would not necessarily make a massive impact on prices — but probably it wouldn’t hurt either.
There is not a magic switch Biden can flip to bring prices down.
Democrats could take steps such as a gas tax holiday or creating a new tax for oil companies to generate revenue that would then be used as a rebate for consumers. However, those both have trade-offs that could lead to higher prices or imperil Biden’s infrastructure law.
But hauling oil executives before Congress so Democrats can get a 30-second campaign ad looking tough berating them over gas prices is just a cynical ploy that Americans will probably see through, especially if nothing changes.
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