President Biden shouldn’t get credit or blame for gas prices

So gas prices have declined in the United States on average for about a month plus in a row. They peaked around $5.02 cents a gallon in very early to mid-June and gas prices are now down to about $4.65, even slightly lower, per gallon. This is a decline of something like seven or 8%.

Gas prices are still relatively high historically but of course, much lower in the United States than in much of the developed world for reasons that we will talk about in a moment. The most important thing is that this has essentially nothing to do with Joe Biden. Now, my perspective on gas prices has been the one that I believe is correct. It might shock you to think I’m correct about this, but as most people often are, I believe that I understand that this issue is not one that has much to do with the American president.

A couple different data points to think about. Number one, gas prices have been increasing globally, globally, not just in the United States. And so to pretend that the American president dictates or controls gas prices globally is giving the American president more credit, more power than the American president holds in reality. 

There are basically three ways that an American president can influence gas prices. Number one is invading an oil rich nation. The idea being well, we can take the oil and then there will be an abundance of gasoline refined out of that oil and prices will go down. Number two…oh, by the way, or can also cause absolute chaos in oil markets by invading an oil-rich country in a way that will reduce supply by destroying for example, oil fields, which will increase prices. Okay. So invasions of oil-rich nations, that’s number one.

Number two, a president can do a gas tax holiday. This is temporary and it will reduce taxes even further on gasoline. By the way, gasoline taxes are already really low in the United States. That’s part of why gasoline is so much cheaper in the U.S. than in much of the rest of the world. And then number three, a president can release oil from what’s called the Strategic Petroleum Reserve – The SPR. If the president releases a ton of oil from the SPR, the most recent estimates I’ve read are it can have a roughly 12 to 15, maybe 17 cent per gallon downward impact on prices. And it is to a great degree, temporary. 

Now the hypocrisy here is the people who have been blaming Joe Biden as gas prices have gone up, but have gone silent as the gas prices have gone down. If it’s Joe Biden’s fault that gas prices move, then he should get credit for gas prices declining. Now, I don’t think he has anything to do with it so I haven’t praised or criticized him on the way up and I haven’t praised or criticized him on the way down. However, I did jokingly tweet about this and say, “Wow, how did Joe Biden do this? How did he get prices down?” And I actually had people seriously responding to me saying “No, Joe Biden raised the prices, but he has nothing to do with them going down.” What? What?

In particular, we are at what is typically a very expensive time of year for gas prices, the summer driving season as it’s called. And yet gas prices are still declining. So if you’re going to blame the president when gas prices go up, you’ve gotta credit the president when they go down. Now, there are also lots of other hypocrites on this who, for example, when gas prices were low under Obama, they said nothing. When gas prices went up under Trump, they said nothing. You can go back and factcheck me, look at my material on gas prices, dating all the way back to the Bush era. And you will see that I have said the same thing.

Presidents have almost no impact on gas prices. 

It’s not about they influence them in the upward direction and it’s not about they influence them in the downward direction. I’ve been consistent because that’s what I believe. And I believe that that’s what the economics show. Now last thing, generally speaking, which, which I said we would, sort of go back to. We have this idea that when oil prices go up, gas prices go up. And when oil prices go down, gas prices come down roughly in tandem, in the same proportion. Over the last 20 years, we have not seen this. And in fact, we have seen with airlines as an example, there will be an additional surcharge added on to airline tickets when gas prices – jet fuel, but it’s all derived from the same oil – when jet fuel prices are high. And then that never goes away.

They just, the prices just stay high. The only change we’ve seen to this was when demand for air travel absolutely collapsed during the pandemic. And then you actually saw really cheap airline tickets. But for the most part, oil prices go up, the cost of gas goes up, cost of airline tickets goes up, oil prices settle. 

You do not see gas come down by the same percentage typically. And when it does, it takes a very, very long time, which of course raises questions about price gouging. And when you look at oil companies and record profits, it’s very clear that they’re doing really well as gas prices are high. That’s a topic for a different day. Biden, I don’t think he has credit or blame for what’s going on with gas prices. If you disagree, let me know in the comments.