President Biden has a problem with gas prices

Yahoo Finance's Rick Newman details how President Biden is in a tough spot politically when it comes to gasoline prices.

Video Transcript

- Welcome back. WTI Crude Oil. I'm looking at on the Wi-Fi Interactive, tanking. Almost 8%, having the worst day in over a year. You check out the price action here on a two month chart. That is an ugly candle. And this comes only days after President Biden announced that he was going to be releasing 500 million, excuse me, 50 million barrels of oil from the US Strategic Petroleum Reserve.

Problem is, at that point, prices went up. And for that we're going to talk about it with Yahoo Finance's Rick Newman. So yeah, after the announcement is kind of a buy the news. But we have some renewed demand considerations with everything happening with COVID today. Can you put it all together for us?

RICK NEWMAN: I guess President Biden is happy to see oil prices going down. But if we get over this dip and markets recover, there's reason to think oil price is going to go back higher than they were before Biden announced he was releasing that 50 million barrels of barrels of oil. So just using WTI futures, they were around 76 before Biden announced that move.

After Biden said he was going to release that oil, they went up to 78, so up by about $2. Let's call that the market fundamental. I mean the sell off we're seeing today seems to be based on the premise that we're going to have another downturn or at least a slowdown in the global economy because of this new COVID variant. But we're going to recover at some point.

So it looks to me that President Biden has a real problem with gas prices around $3.50. And if this swoon in the markets lasts, well then gas prices will go down. And Biden will say, oh see what I did, I put all that oil into the market and I accomplished what I wanted to.

But of course, that would come along with a slowdown in the economy, which is not good for Biden either. So I'm skeptical that the release of that oil earlier this week is going to have the intended effect. And I think Biden's going to have gas price problems well into 2022.

- And Rick speaking of these potential problems, the GOP, they're looking to capitalize on this, Republicans exploiting the fact that Americans are paying so much higher prices in gas than we were just a year ago. When you take a look, I guess, at what the GOP is doing, do you they're being effective in their approach to this so far?

RICK NEWMAN: It's disingenuous to say Joe Biden, President Biden, is causing the increase in gas prices. But it doesn't matter because it's going to work. People feel this pain. And they don't-- you know voters don't necessarily care that much about connecting every dot. They blame the person who's in charge.

So if gas prices stay where they are-- and by the way, they're not-- gas prices are not stratospheric. We've had gas prices well over $4 a gallon on average before. That is a real pain point. Right now there are around $3.50 on average. So this isn't terrible. But the reason that I think Republicans are going to get traction on this criticism of Biden is because at the same time, Biden is worrying about gas prices, he's also promoting this clean energy agenda.

And it might seem to some people that the one thing, the clean energy agenda, trying to get this transition underway is causing the increase in gas prices. It's not. But it's unfortunate for Biden that these two things are now going hand in hand, because it makes it easy for Republicans to say, look, President Biden, whatever he wants to do on green energy, it's going to raise your energy costs. And the fact is energy prices are going up. So it's a problem for Biden no matter what he says about it.

- Yeah a bigger problem in an election year, which is approaching right now. Thanks for joining us. Yahoo Finance's Rick Newman.