Yahoo Finance Biden is getting antsy about rising gas prices
It's not part of his campaign pitch, but President Joe Biden is determined to keep a lid on gas prices as he runs for reelection.
Gasoline prices have been drifting upward this year, reminding voters of one of Biden's biggest liabilities.
While Biden doesn't have to buy his own gas as president, he was still deeply stung by the run-up in prices in 2022. Biden's approval rating sank as prices for gas and many other things were spiking, and it has never recovered.
Gas prices moderated in 2023, but they're now drifting back up, from around $3.20 per gallon at the beginning of January to about $3.60 now.
A recent run-up in oil prices and rising tensions in the Middle East suggest gasoline could get pricier still.
Biden doesn't want to call attention to rising energy costs, but he's taking several behind-the-scenes steps to help keep oil supplies abundant and make sure gasoline doesn't hit the touchy $4 per gallon mark.
The Department of Energy, for instance, recently canceled two major purchases of oil for the US strategic Reserve, citing high prices. Biden released about 230 million barrels of oil from the reserve in 2022 and 2023, after Russia's invasion of Ukraine sent prices soaring and gasoline peaked at $5 per gallon. The DOE began slowly refilling the reserve last summer.
With WTI crude oil, the US benchmark, trading at around $87 per barrel, the DOE said it was protecting "the taxpayer’s interest" by declining to buy oil above its target price of $79.
But there might be other reasons.
"The Department may have decided it does not want to risk driving prices any higher," ClearView Energy Partners surmised in an April 3 analysis. Any new demand, whether from the government or the private sector, puts upward pressure on prices, and it’s clearly not in Biden’s interest to do that.
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The Biden administration has also leaned on Ukraine to curtail its new campaign to attack oil refineries deep inside Russia.
More than two years into the war, Ukraine has finally developed weapons with the range to attack infrastructure inside Russia, just as Russia is doing in Ukraine. It’s a legitimate wartime tactic meant to damage the fuel supplies Russia needs to wage war, and also to crimp one of the main sources of Russian revenue.
But Washington, Ukraine's supposed ally, has beseeched Ukraine to stop the attacks out of fear that the loss of Russian petroleum products on global markets could raise prices for Americans.
This comes as US aid for Ukraine’s war effort has dwindled to practically nothing and a small coterie of conservative Republicans in the House of Representatives is blocking $60 billion in additional aid the Senate has already passed. So the United States is basically telling Ukraine, "We can’t help you, and we don’t want you to help yourselves, either."
Finally, the Biden administration appears set to continue sanctions relief on Venezuelan oil sales that it established last October, even though Venezuelan President Nicolás Maduro is not abiding by the conditions Washington laid out last year. Relief essentially lets Venezuela sell a bit more oil to the United States and to other global buyers, marginally increasing the global supply.
None of these moves involves a lot of oil, which may indicate just how anxious Biden and his reelection team are about the prospect of higher gas prices.
For the last year, the OPEC+ oil-producing cartel, which includes Russia, has been trimming production to prop up prices. For much of that time, oil prices remained below $80 as markets normalized following Russia's Ukraine invasion. A weak Chinese economy has also sapped demand from the world’s biggest oil importer, helping keep a lid on prices. But the Israel-Hamas war now poses escalation risks that could affect Middle East oil supplies, which has been pushing prices up.
One thing Biden hasn't done is offer incentives for American drillers to produce more oil, which would clash with his vow to move the US economy off of carbon. But higher prices are enough of an incentive. The United States has been the world's largest oil producer since 2018, and domestic oil production in 2023 hit the all-time record for any country, ever.
US exports of crude are also at record highs, and the United States is even taking global market share away from the OPEC+ producers. America’s capacity to produce more oil, in fact, may be the biggest factor keeping prices in check. Maybe Biden doesn’t have to worry quite so much.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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