The Blame Game for Fuel Prices

The Blame Game for Fuel Prices

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Robert Scott

Who is to blame for high gasoline prices? If you are a died-in-the-wool Trump enthusiast, the answer is obvious: blame President Joe Biden. If you are a died-in-the-wool Democratic apologist,blame Russia and the war in Ukraine instead. Both are wrong.

Those of us who remember the OPEC-driven fuel crisis in the 1970s and 1980s learned a harsh truth: oil prices worldwide drive gasoline prices here. That was the case then, and it’s still the case now. Let’s look at the blame game being played by politicians from Columbia and Atlanta to Washington, DC, and see how that comports with the real cause of high prices: supply and demand.

Among the first things one hears blaming the Biden administration is the administration’s first month in office, cancelling the Keystone XL pipeline designed pipe in Canadian oil, and the simultaneous cancelling new drilling leases on federal lands. Both were due to concerns about pollution and global warming. What was the effect on fuel oil supply? The answer: none. In the case of the Keystone XL pipeline, it was only eight percent complete on President Biden’s first day in office – that’s 8% complete, with 92% still unbuilt. It never provided one drop of Canadian oil to anybody; even if everything were approved, the pipeline would not have been completed until next year, 2023. Its cancellation did not reduce anything in 2022 other than future hopes, along with the potential for leaks and pollution. And those federal leases? Court rulings quickly caused the administration to backtrack. Instead of reducing federal drilling permits, the administration ended up approving 34 percent more permits its first year than did the Trump administration its first year. 

Why, then, did prices soar? It wasn’t because of Russia and Ukraine. That horrible war might have an effect in the future, but not yet. The pipeline carrying Russian oil into Europe may be closed soon, but so far (unfortunately) it has not been. The real culprit: COVID-19 worldwide. Demand for oil fell so precipitously that, for a while, the barrel in which oil is traded was worth more on the market than the oil inside the barrel; empty barrels cost more than full ones. Industry cut back oil production everywhere. Then, quite rapidly, the COVID-19 pandemic came under control due to near-miraculous vaccines and medications, and the economy boomed – not just here, but everywhere. So did demand for oil. And oil producers and refiners found they could not keep up with demand, which quickly surpassed even pre-pandemic levels. Prices soared everywhere. 

If you think about it, you will have to conclude that an American President and administration have only a marginal effect on oil prices in Australia, in Norway, in India, and even in the United States. The Ukraine War has not yet had time to have an effect, and in truth, it may not if world energy production outside of Russia continues to ramp up at its present rate.

As is the case for so many other things, American politicians blaming other American politicians for worldwide high energy prices are wrong, and arguably they are intentionally wrong. It’s just easier to play the blame game than to work with our energy sector – including the “green” energy sector – both to raise supply and to lower demand for petroleum-based energy. The message for politicians of both parties: don’t blame, fix instead.