Senior White House officials said a drop in wholesale gas prices suggests retail prices could drop by 50 cents per gallon or so in coming weeks.
Biden has been referring to spiking gas prices and other types of inflation as the “Putin price hike,” blaming Russian President Vladimir Putin’s invasion of Ukraine for spiraling prices. But that’s only partly correct. From the time Biden took office until Russia invaded Ukraine on Feb. 24, gas prices rose from $2.40 per gallon to about $3.50. That 45% increase had nothing to do with Putin. Since the invasion, prices have risen by another $1.15 per gallon, or another 33%.
World energy markets were already getting tight by the start of this year, before Russia invaded. Oil and gas producers took a beating in 2020, when the COVID pandemic torpedoed economic activity, and they shuttered some of their least productive wells and refineries. Then the economy recovered faster than expected, with strong demand and curtailed supply pushing prices up.
Biden is trying to pull several levers to bring oil and gasoline prices lower still. His mid-July trip to Saudi Arabia and other Middle Eastern countries is a clear gambit to persuade the Saudis and other large oil producers to generate more oil. Biden administration officials also say they’re working with U.S. energy firms on ways to expand production and add refining capacity, which is another bottleneck pushing prices up.
Inflation doesn’t just threaten Biden’s popularity. It could end the Democrats’ control of both houses of Congress in this year’s midterm elections, giving Republicans control of one or both houses and with it the ability to completely block Biden’s legislative agenda. For falling gas prices to change voters’ minds, they might have to dip below $4 on average before the elections in November. It’s possible, but it might require an economic slowdown that dents demand, along with no further supply shocks emanating from the Ukraine war or from sanctions on Russia. Fill ‘er up while you can afford to.
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