Biden Continues Gas Price Blame Game While Preserving His Leasing Ban

President Joe Biden’s message to gasoline retailers for the July 4th holiday weekend was every bit as confrontational and unproductive as one might expect. The operators of the presidential Twitter account published the following message on Saturday:

“My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril,” the @POTUS account stated. “Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.”

Thus, we see the President seeming to “work like the Devil” to lower gas prices by publishing a threatening tweet. Coincidentally, because the price for crude oil has moderated somewhat over the past two weeks, the price of gas at the pump has moderated as well. AAA reports that the average national price for a gallon of regular stood at $4.81 as of Sunday, down 21 cents from its all-time high of $5.02 achieved on June 14.

Biden’s self-serving tweet elicited a response from AmazonAMZN
founder and Washington Post owner Jeff Bezos, who castigated the administration for its ongoing blame-shifting efforts. “Ouch. Inflation is far too important a problem for the White House to keep making statements like this,” Bezos wrote on his own Twitter account. “It’s either straight ahead misdirection or a deep misunderstanding of basic market dynamics.” A good case could be made that both factors described by Bezos are at play here: Biden has intentionally filled his administration with anti-oil and gas activists who have no real understanding of oil markets, and has been desperately trying to shift blame for high gas prices for more than a year now.

The presidential tweet is a pretty transparent attempt by the White House to assume some of the credit for the 21-cent gas price reduction, though experts would likely contend that the drop was due to a variety of market factors, chief among them speculation in the markets of a looming demand-killing recession. That speculation was offset late in the week by supply disruptions due to strikes in France and Norway and war in Libya, as well as the growing realization that OPEC+ has essentially lost its ability to influence the market with more exports.

Meanwhile, as the White House was attempting to seize credit for a price fluctuation beyond his control, the administration’s senior political appointees used the week to take more actions to depress the domestic oil and gas industry. In addition to the EPA’s announced intent to declare the Permian Basin to be in ozone non-attainment (which I wrote about on Friday), Biden’s Department of Interior, led by Secretary Deb Haaland, waited until a day after the deadline mandated by statute to release its draft 5-year plan for offshore leasing for oil and gas exploration in federal waters.

The plan, released as a standard Washington D.C. document dump late on Friday evening of a holiday weekend, is predictably restrictive and amounts to a transparent effort to afford Sec. Haaland with the needed rationale to continue the de facto ban on offshore leasing she and the President have imposed since the day Biden took office.

Reuters reports that the plan contemplates holding “0 to 11” auctions in the Gulf of Mexico over the next 5 years, and possibly, maybe, one in Alaska’s Cook Inlet. It contains no thought of holding any auctions in the waters off the North Slope of Alaska or offshore in the Atlantic or Pacific oceans. Crucially, Haaland, a life-long oil and gas opponent, said that DOI may in fact hold no auctions at all, continuing the trend she has established over the past 17 months. She indicated that public comments on the plan would rule the day, echoing Biden’s own remarks that actions like this one designed to hamper the domestic oil industry are integral parts of the “incredible transition” to renewables.

“From Day One, President Biden and I have made clear our commitment to transition to a clean energy economy,” Haaland said in a statement. “Today, we put forward an opportunity for the American people to consider and provide input on the future of offshore oil and gas leasing. The time for the public to weigh in on our future is now.”

Haaland’s message to the “American people” in that statement is mainly a message to the anti-oil and gas activist community. The Administrative Procedures Act requires DOI to consider public comments before moving ahead with plans like this one. Over the last 30 years, the environmentalist community has perfected the practice of flooding the DOI with hundreds of thousands of identical, cut-and-paste statements of opposition to every such plan. That will certainly happen again, while the industry itself will most likely mount its traditional token effort on its own behalf, managed through a handful of trade associations and NGOs. Haaland will then count up the totals and use that to support her decision to move forward, most likely with no lease sales at all.

If we have learned nothing else about his administration over the past 17 months, we surely should have learned that it has every intention of keep Mr. Biden’s 2020 campaign promises to “end” leasing for oil and gas in the federal offshore.

Like U.S. refinery operators, gasoline station operators are not price-setters but price-takers. The prices they charge to customers are determined based on a combination of market factors, taxes and regulatory actions. There is simply no denying that pretty much every regulatory action taken by the Biden administration to this point has had an upwards impact on prices retailers charge at the pump.

This week’s actions by EPA and DOI are just the latest two examples. This is the Biden plan.