Report: the Biden Administration’s involvement in gas prices

Kade Brackin, Editor-in-Chief

According to the United States Energy Information Administration, prices rose to $3.38 a gallon last month. That’s the highest price per gallon since June 2014. Some Americans have accused President Joe Biden and his administration of driving up gas prices, while some believe OPEC or COVID-19 is responsible.

First of all, after researching, it seems most likely that Biden’s policies are not driving up gas prices. According to Robert Rapier, a chemical engineer with 25 years of international engineering experience in the chemicals, oil and gas, and renewable energy industries and senior contributor for Forbes Magazine, oil markets won’t react quickly to Biden’s policies. He goes on to say that the cancellation of the Keystone XL pipeline might affect prices a decade from now, seeing as it was never built. He also explains that the halt on drilling permits won’t matter because companies have likely stockpiled them for years just in case something like this was to happen. Rapier does believe that it is possible Biden’s policies could affect gas prices in the future. Gabrielle Settles of PolitiFact also explained that historically, presidents have no effect on gas prices. She cited gas prices under the Bush Administration that hit both record highs and record lows, ranging from $4.11 per gallon to $1.07 per gallon. Whether this applies to Biden’s Administration remains to be seen.

Second, OPEC’s policies don’t seem to be driving prices up. While OPEC is only increasing production by about 400,000 barrels per day, according to Andy Kiersz, the quantitative editor for Insider, it does not seem to be the reason prices shot up. This means that OPEC is in a position to help but is choosing not to. According to Rapier, oil markets are healthy, so OPEC has no reason to increase production. Higher prices generally mean more profits for them anyway.

Finally, COVID-19 seems to be the reason behind the sharp increase. Why weren’t prices high in the middle of the pandemic then? According to information from Peter Volkmar, a researcher from the Baker Institute, demand was incredibly low. In fact, demand was so low that gas prices hit record lows. This means that, naturally, production fell to meet the demand. Now that the world is ‘reopening,’ demand is increasing very quickly, and with it, prices; however, production is not increasing as quickly. ‘Economics 101’ says that when demand is high, and supply is low, prices increase. Volkmar adds that inflation is another factor in the price of gas. The reason it is so noticeable is because, after getting acclimated to low prices, consumers finally get to see prices high again with inflation on top. Volkmer explains that when inflation rates are accounted for, prices are just as high as when they peaked in 2015 and 2018.

The research seems to indicate that Biden’s policies are not responsible for the increase in gas prices. They do seem to indicate that his policies can affect prices in the future, though. OPEC is in a position to help, but if they do not increase oil production, gas prices will not fall significantly. COVID-19 seems to be the real reason behind the increase in prices. It also seems likely that prices will decrease in the coming months.