The White House continued to engage in a Twitter war with Amazon founder Jeff Bezos about high gas prices.
“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,” President Joe Biden declared in a Saturday post to his Twitter account. “Bring down the price you are charging at the pump to reflect the cost you’re paying for the product.”
“And do it now.”
The world’s third-richest man was apparently aggravated by the president shifting the blame for high gas prices to oil companies and gas stations. He responded to President Biden’s tweet with a retweet, adding his thoughts:
“Ouch. Inflation is far too important a problem for the White House to keep making statements like this,” Bezos commented in a Saturday evening post. “It’s either straight ahead misdirection or a deep misunderstanding of basic market dynamics.”
Bezos has a point because the United States is not at war. True, we are providing billions in military and economic aid to Ukraine, which is at war with Russia. But, for the first time in decades, the U.S. is at peace.
One of the president’s first acts after assuming office was cancelling the Keystone XL pipeline destined to carry 830,000 gallons per day of Canadian oil to U.S. refineries. It is unclear how much the lower supply resulting from the cancellation had an effect on crude oil price but it is safe to say it was greater than zero.
Recovery from the pandemic dramatically increased consumer demand as Americans began driving and flying more to celebrate the perceived end of the pandemic. Greater demand increased prices, which eventually stabilized just before Russia invaded Ukraine.
The president has often blamed the Russian invasion for higher oil prices, but Ukraine is not a large exporter of gas. Oil and gas flow from Russia to Europe through pipelines, one of which (Nordstrom 1) crosses Ukraine. So, the real driving force is the sanctions imposed by Biden and European leaders acting in concert with the U.S.
That did not stop the White House from repeating their claim that “greedy” oil companies are responsible for high prices at the pump.
“Oil prices have dropped by about $15 over the past month, but prices at the pump have barely come down. That’s not ‘basic market dynamics,’” White House Press Secretary Karine Jean-Pierre responded. “It’s a market that is failing the American consumer.”
A $15 drop in the spot price for a barrel of oil is a misleading way for the White House to frame their argument. Each barrel of oil contains 42 gallons of oil, which would translate to a decrease of 0.36 cents per gallon. Americans do not fuel their vehicles with oil, though, so it must first be refined. Refineries are expensive and their increased costs may well swallow up a .36 cent decrease in the price of oil.
“But I guess it’s not surprising that you think oil and gas companies using market power to reap record profits at the expense of the American people is the way our economy is supposed to work,” Jean-Pierre concluded.