Is Price Gouging The Root Cause of High Gas Prices?
Headline Roundup July 7th, 2022
President Joe Biden and his administration are taking actions to prevent oil companies from price gouging, but is that truly the root of inflated gas prices?
The price of gas has been steadily increasing since the low of $1.77 a gallon was recorded at the start of the COVID-19 pandemic in April 2020. When consumers phased back into their regular habits, some analysts found that the available international supply of oil couldn't keep pace with the spike in demand. The price of crude oil, which changes based on worldwide supply and demand, accounts for nearly 70% of the price that Americans pay at the gas pump. The global crude oil supply was further disrupted when a multitude of nations placed sanctions on Russian oil to combat Vladimir Putin's ongoing invasion of Ukraine. The Biden administration has attempted some short-term solutions, such as releasing 80 million barrels of oil from the national petroleum stockpile and possibly pausing the federal gas tax.
With high gas prices likely to continue into the fall, Biden has pointed fingers at Big Oil companies for exploiting gas prices. Democratic lawmakers have promoted the Consumer Fuel Price Gouging Prevention Act, but the legislation is stalled in the Senate. Some left-rated voices have criticized Republican lawmakers for "actively" mobilizing against the proposal, which they believe makes them "chief defenders" of "Big Oil profiteering" and "price gouging." Conservative voices often blamed the Biden administration for not promoting domestic oil production to fit its agenda of transitioning away from fossil fuels. Some right-rated outlets framed higher taxation of Big Oil companies as bad ideas that would disincentivize domestic production and keep prices high.
U.S. presidents have little control over the price that consumers pay for gasoline. As the Energy Information Administration explains, gasoline prices are mainly affected by the price of crude oil, a fossil fuel that is refined into gasoline. And the price of crude oil is set on the global market, based largely on worldwide supply and demand.
When economic activity declined sharply in the U.S. and other countries early in the COVID-19 pandemic, global demand for crude oil declined along with it, leading to a dramatic drop in the price of crude oil and gasoline, and, consequently,...
In the days leading up to the Fourth of July weekend, when millions of Americans travel by car, Republicans sought to blame President Biden and congressional Democrats for high gas prices. Wisconsin Senator Ron Johnson, in the midst of a tough reelection fight, blamed $5-a-gallon gas on “the elite Democrats that support President Biden’s environmental policies.” Senate minority leader Mitch McConnell (R-Ky.) accused Biden of “waging a holy war against American fossil fuels.” And Utah Representative Chris Stewart claimed that “President Biden’s energy policy is one of the greatest self-inflicted...
Big Oil has been the go-to boogeyman for President Biden and Democrats over alleged “price gouging,” with “Putin’s price hike” a close runner-up.
But profits made by the oil industry — while at record levels — ebb and flow with global energy markets, not because the firms are manipulating costs, according to market analysts.
“It’s just political posturing and pandering,” Ed Hirs, an energy economics professor at the University of Houston, said of the president’s anti-corporate rhetoric. “If the focus is just making profits, when is [Mr. Biden] going to turn his guns on Apple?”...