Last updated on July 18th, 2023 at 01:53 pm
Entire treatises have been written on how one values a barrel of oil or a gallon of gas. The value of the global commodity depends upon so many moving factors that airlines and other petroleum-dependent industries are forced to buy future deliveries at a set price to lock in current sales of seats or other products. It is hard during normal periods. But given the sanctions on Russia, global inflationary pressure, and possible manipulation by some of the Arab states (the reason for Biden’s meeting with MBS), it is not hard to understand why prices are currently through the stratosphere. And yet, few Americans know just how much profit-taking and price-gouging is happening within the oil industry in this country and how little the Republicans – who voted against a price-gouging bill – care.
To that end, President Biden wrote a public letter to each executive at the major petroleum producers and refiners. As reported by Mediaite:
(T)he sharp rise in gasoline prices is not driven only by rising oil prices, but by an unprecedented disconnect between the price of oil and the price of gas. The last time the price of crude oil was about $120 per barrel, in March, the price of gas at the pump was $4.25 per gallon. Today, gas prices are 75 cents higher, and diesel prices are 90 cents higher.”
Biden then pointed directly at what he saw as unfair gouging and profit-taking done because the companies know that the American public will blame Biden or Russia or anyone but them:
“I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office. But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,”
Biden then set out what he was prepared to do and what he expected the oil companies to do along with him:
In addition, my Administration is prepared to use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied. Already, I have invoked emergency powers to execute the largest Strategic Petroleum Reserve release in history, expand access to E15 (gasoline with 15% ethanol), and authorize the use of the Defense Production Act to provide reliable inputs into energy production. I am prepared to use all tools at my disposal, as appropriate, to address barriers to providing Americans affordable, secure energy supply.
It would be nice if we didn’t need to worry about the lingering worry that oil companies, being hostile to the Democratic “Green energy” plans, wouldn’t collude to incentivize keeping prices high throughout Biden’s term to hurt Biden and Democrats politically (There is no evidence of such collusion or plan, it is merely a “worry” to some Democrats). It would also be nice to not have to worry about the lingering through of MBS dumping $2 billion into Jared’s new investment start-up and what other, less formal, deals may be in place between the two, such that Saudi Arabia is also motivated to keep capacity down and prices high in an effort to hurt Biden (Same context.)
What we know with certainty is that no matter how obvious it may be that Trump would have no idea as to how to handle such a global crisis coming out of COVID, the prices will be held against Biden despite the fact that the president has little to do with the price of gasoline in good times or bad.
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