In announcing the ban on Russian oil imports today, President Biden called the rapid increase in gas prices that Americans have seen “Putin’s price hike.”
Let’s just take a moment to look at the trend in gas prices recently.
You can use your cursor to hover over the line to see the exact date and price. That data is from the weekly time series on U.S. retail gas prices, which you can find here.
That dip in the middle of the graph is from the pandemic. You may recall in April 2020 when West Texas Intermediate, the benchmark price for U.S. oil, went negative. Stay-at-home orders meant the demand for gasoline plummeted as driving rapidly declined.
In other words, the price for gas was unusually low, and it should have been expected that it would rise as people began to drive again. That is indeed what we saw. Mid to late 2020 saw a new plateau, still well below the pre-pandemic price, still probably lower than normal since many people still weren’t traveling due to Covid.
So when Biden took office in January 2021, it was expected that the price of gasoline would rise under his watch. And it did, steadily increasing through the first part of 2021.
The price of gas on March 9, 2020, the last week before lockdowns started, was $2.375. It had returned to that level again on the week of January 18, 2021, right before Biden took office.
You can see that after a sharp increase in the first part of 2019, gas prices had been moving down gradually for a while before the pandemic began. The highest gas prices in 2019 were the week of May 6, when the price was $2.897. Gas prices reached that level again by the week of May 10, 2021.
Then, they kept going up. You’ll see that in late 2021, gas prices declined slightly. That’s not unusual in the winter months at the end of the year, when people normally drive less. You may remember Democrats trying to say that decline was a huge win for President Biden.
In January of this year, the upward trend resumed, culminating in this past week’s jump of nearly 50 cents, the largest single-week jump in this data set (which goes back to 1990).
That may be “Putin’s price hike.” But what were the rest of the price hikes?
Rising gas prices pre-existed Biden’s decision to ban Russian oil imports. And, as Kevin pointed out today, Russian oil imports account for a tiny fraction of U.S. oil consumption.
Putin’s war in Ukraine is certainly causing major problems on the global oil market. Even before this ban, most oil traders were shying away from Russian oil for fear of potential future sanctions and basic safety concerns. If you run an oil tanker company, you don’t want to send your ships into the Black Sea right now, sanctions or not.
But that’s what matters for gas prices: The global oil market. Not who occupies the Oval Office.
And not corporate greed. Biden today said in his announcement:
To the oil and gas companies and to the finance firms that back them: We understand Putin’s war against the people of Ukraine is causing prices to rise. We get that. That’s self-evident. But, but, but, but — it’s no excuse to exercise excessive price increases or padding profits or any kind of effort to exploit this situation or American consumers, exploit them. Russia’s aggression is costing us all. And it’s no time for profiteering or price gouging.
Invoking the “finance firms” here is an extra strange twist — it’s true: oil companies use money! But (but, but, but) oil companies are just as much subject to the global price of oil as American consumers are at the gas station. None of them has price-making power.
Neither the sharp increase in the first half of 2019 nor the steady decrease in the second half was due to President Trump. Neither the steady increase nor the tiny decrease in 2021 was due to President Biden. The problem for politicians is that they want to take credit when prices move down and blame everyone else when prices move up.
In keeping with that trend, Biden said today that the administration “can’t do much” about rising gas prices. He’s right! He just needs to stick to that story when prices move down, too — and stop with the economically illiterate talk about corporate greed setting prices.