Price Signals and Gas Prices: Biden is Lying, Badly
Thrifty Gas Prices in San Pedro, 4 June 2008. Photo by Marshall Astor from San Pedro, United States, CC BY-SA 2.0
He is a politician, so Biden lying is par for the course, but Biden is infamous for his blatant humdingers. His most recent widely stupid claim is that none of the things he has done or said as president (or as a candidate) has had any effect on the sky-high soaring price of a gallon of gasoline. True, the President isn’t solely responsible for this, but he clearly has an effect. When gas prices soared in Obama’s first term, Obama tried the same thing during the 2012 election. Thankfully, in spite of Obama’s attempt to stymie it, fracking took off strong in his second term and then Trump followed him as president, which led to a massive downward shift in the price of a barrel of crude oil. For all the bad of Trump, he definitely kept the gas prices down. The coronavirus probably helped with that in his last year, but then Biden had to win…
Sensing a false mandate for a Green New Deal paradigm shift, Biden undid a lot of Trump’s pro-American energy policies while doing things that enriched other countries that drill, refine, and/or produce oil. Beyond cancelling the Keystone XL pipeline, he banned new leases on federal lands (and a massive part of America’s landmass is owned by the federal government,) stopped oil exploration and drilling in Alaska that Trump allowed, added many regulations on all factors of the American oil industry, slowed down natural gas exports, approved the Nord Stream 2 pipeline at the behest of Germany (which has now been cancelled due to Putin being an obvious war criminal,) etc. We were a net exporter of energy on election day 2020. We are not anymore. Maybe gas being up over $2.00 a gallon since that time might be at least a little bit Biden’s fault, huh?
Now, some are already saying “What about Ukraine?” Yes, but before Putin decided to start a blatant war of aggression and commit loads of war crimes, gas was already up about a $1.50 a gallon in my neck of the woods since election day 2020. “But what about inflation?” Gas prices are why inflation is going crazy. This isn’t hard to understand. You make it both harder and more expensive to explore, drill, transport, refine, and/or export oil, on top of any other new taxes and regulations on the oil and natural gas industries, gasoline will get more expensive. And since virtually everything is transported or made with some sort of oil-based product, the price of everything goes up. Beyond the insane spending of the last four administrations inflation is currently almost solely tied to gasoline in America due to our catastrophically low interest rates. Interest rates that have never really gone up since the 2008 financial crisis. I have a big problem with the Federal Reserve controlling those interest rates, but that’s a story for a whole other day. This is basic level supply chain management, which our Transportation Secretary couldn’t be more out of his depth to handle.
“But didn’t the reopening of the economy have an effect on gas prices?” Nominally, but not anywhere near all the other actions Biden took. And that convenient line the media and other blatantly partisan actors are running with ain’t helping Democrats in November. It’s the economy, stupid. Pocketbook issues will always rule the election day.
“But what about green energy?” As long as we don’t push nuclear, technology for wind, solar, and biofuels just isn’t there to readily and quickly replace oil and natural gas due to their insane relative efficiency in producing energy cheaply and quickly per kilowatt hour per square foot. Energy produced per hour per square foot is the measure of energy production efficiency. The numbers for oil, natural gas, and coal are crazy higher on that metric than wind and solar. Batteries need to get much better before wind and solar could even begin to compete on that. Invest in it, sure, but none of it is replacing oil and natural gas anytime soon. Coal, which is far dirtier, is what will inevitably take up the slack in the interim. Moving on…
2022 was already shaping up to be a bloodbath for Democrats. Anyone who was expecting them to pull a miracle that has only happened once in modern politics (because of post-9/11 unity that didn’t last) was already huffing their own smug farts, but now? Biden is lucky if the Republicans don’t run the table on basically every competitive race like in 2014 (outside of my governor, sadly,) assuming Trump’s endorsement shenanigans don’t derail some winnable races. Senator Warnock and Stacey Abrams are probably DOA just because it’s GA during a midterm with a wildly unpopular Democrat in the White House. Senator Ossoff is lucky he’s got six years before he loses. Since the Republicans would be stupid to repeat the Kavanaugh circus that boosted the Republican Senate Majority in 2018 with the latest SCOTUS vacancy, I don’t see what can turn things around for Biden, especially since he’s leading from behind on Ukraine.
But you’ll notice the first thing in the article title. “What are price signals?” Price signals are a very basic economic concept. I saved this for the end for that reason. Gasoline is one of those things that is heavily dependent on the futures market. In essence, since crude oil is a commodity, much like pork belly and frozen orange juice, the current price of gasoline bakes in what futures traders think will be the future price of crude oil. Biden kept signaling throughout the 2020 campaign and his entire time in office that it is the beginning of the end of American oil and natural gas production. What do you think that did to the price of a barrel of crude oil on the futures market? You get three guesses and the first two don’t count.
The Biden administration approved more oil and gas permits in its first year then Trump did in each of his first three years.
Biden tried to go through with Trump’s lease sales in the Gulf and got stopped by the courts.
Biden cancelled the Keystone XL permit for a pipeline that was 10% built, wouldn’t have been ready until at least next year, and would have carried tar sand oil that is not refined into gas or diesel because it’s chemically the wrong kind of oil.
That’s just three if your taking points that are wrong on the facts. You also mischaracterize tge Administration’s role in Nirdstream and what and why we need alternative energy.
And you conveniently left out the part about oil companies not ramping up refining capacity to prevent-Covid operational levels because they claim they don’t have labor or parts.
Very little if this is Biden’s fault. Put the blame where it belongs.Report
Thanks for reading. Feel free to write a response article on the very website this article is on. Maybe I’ll respond in kind.Report
This is legit hilarious.Report
And entirely consistent. Throw out a bunch of fact free polemics and refuse to engage when you are called out on it.Report
Submit an essay to the website.Report
I guess he won the debate already then.Report
Actually, I did. Because I got published here.Report
The soft bigotry of low expectations.Report
Unfortunately, I can’t say this is exactly a one-off for Russell.
It’s sadly par for the course for his last several major articles.
I’d call it “click-bait” except OT doesn’t run on ad revenue. So I’m at a loss why the standards are so low.Report
Bro I really like this group blog but it’s published some real trash over the years.Report
Philip gets published here, too, but let’s not spend all day harping on editorial standards.Report
Why not? It’s a great way to deflect from engaging in the issues.Report
Re: Tar Sands
http://refineryreport.org/tar-sands.phpReport
Word is the bigger investors in the fracking companies have told them not to increase their drilling rates. Rather, it’s “Sell oil at $100, pay off some of the massive debts.” I live a few miles from the rail yards where the fracking sand for the entire NE Colorado region is delivered, to be transferred to trucks to take it to the drilling locations. The long lines of cars loaded with sand are still there, but the truck traffic has almost completely stopped. No one is fracking very many new wells.Report
A million years ago, I read an essay explaining a handful of things that changed in 2001 when Bush granted China permanent Most Favored Nation trade status.
China had MFN status for years prior to this, of course. But it was something that had to be renewed every year by congress.
After MFN status was made permanent, a whole bunch of factories that had not moved in the years prior finally up and moved. A whole bunch of things that were tentative in years prior went full-out.
Why? Well, it wasn’t just the current status of Most Favored Nation, it was the uncertainty (however mild) that the status would be there next year. Hey, maybe there’d be a shift in the House. Could happen.
When it was made permanent, this uncertainty evaporated and a lot of things that were too risky the year before became a good solid bet.
The problem isn’t just “Is X there now?” but “Will X be there next year?”
Let’s say Biden relents and says “Okay, fine. We’ll allow Keystone again.”
That won’t fix the problem. For one thing, I’m not sure that that won’t change again in 2023. More importantly, I’m not sure that investors will be sure that that won’t change again in 2023.Report
“But didn’t the reopening of the economy have an effect on gas prices?” Nominally, but not anywhere near all the other actions Biden took.
I don’t know that’s true though. And you don’t really demonstrate it.
And that convenient line the media and other blatantly partisan actors are running with ain’t helping Democrats in November. It’s the economy, stupid. Pocketbook issues will always rule the election day.
I know I’m griping now, but that doesn’t demonstrate the validity of your argument either.Report
You will notice he doesn’t care.Report
I don’t know if you or he care. You both seem quick to calculate Biden’s relative responsibility in your heads and both find answers that support your political sides.Report
I actually care a lot. I grew up in the oil patch; I still have close friends in the oil patch. I worked the federal response to Deep Water Horizon.
What I threw out above is just a summary level recapitulation of a lot of press on this issue over the last 6months to a year. And no, I don’t agree with the administration for which I work on a lot of this, but I’m also not in charge of anything.Report
“Born and bred in the oil patch.”
My first real job was running a computer in a refinery, My first full-time job was working on the software that computer ran. So me too.Report
I’m bemused by the overall post which I think is quite poorly reasoned but applaud as a magnificent example of where right wing/Republican thought is at the moment.
One critique I’d like to offer that hasn’t been brought up by others is that it’s surprising that an article from a gentleman who espouses the markets efficiency and market actions totally ignores the part that the cycle of the market for oil plays in our current prices.
Specifically, Russell notes that oil prices were much lower during Trumps administration. This initially was because fracking caused a considerable increase in supply (he blames Obama for failing to stop it, I credit Obama for not trying particularly hard to stop it) and later because demand was cratered by the Covid disaster. Ignored in all of this is the conundrum that this lengthy period of low prices presented for oil producers. They had too much supply and a terrible price. So, like any sensible business they cut back on expenses such as the expense of developing additional wells, additional oil pumping capacity, etc etc endlessly. This produced a natural reduction in supply and a reduction in future supply that led, inexorably, to our current situation where demand has rebounded, supply struggles to catch up and prices soar. This oversupply-undersupply is a natural cycle of resource extraction businesses because one cannot simply wave a wand and turn a patch of oil rich land into an oil well or a producing mine overnight.
Personally, I’d say that the business cycle and economy strength are easily and far away the prevalent cause of our current high prices and that particular cause also lies mostly outside the reach of the gummint as it’s currently constituted. I’d personally lay the second tier blame mostly at the feet of the war and general Covid related supply and production snafus and leave administration action as a tag along third tier of not much great consequence. Whatever Bidens’ admin has done or said their ability to effect oil prices is a lot more limited than anyone, left or right, likes to admit.Report
I often wonder why the editors allow these kinds of “all perspectives matter” kind of posts to even go up, perhaps it is to purposely start flame wars in the comments and they think it will drive new clicks to the site, but the overall OT site audience is so narrow, its either unabashed hard right-wing adjacent libertarians that make a poor effort at concealing their true nature or a few feckless liberals that like to hear themselves talk or see themselves in digital print as it were. I mean, my father in law hit me with this same intellectually bankrupt argument, “buh democrats no like oil and drilling so that’s why price is high.” I told him I was aware of the little known fact that the resolute desk has a secret dial that controls the global price of crude oil– because trying to present any kind of facts to these people is akin to kicking a brick wall in slippers.Report
“I often wonder why the editors allow these kinds of “all perspectives matter” kind of posts to even go up,”
Maybe it’s to balance the more left, leftish, left of center preponderance of posters here. The days when this site was more “balanced” in posted comments is long gone. I read this site because, although the leaning is pretty much one sided, it’s more articulate and intelligent than most other sites in the same vein.Report
There’re a misconception in your comment. OT doesn’t have any ads and derives absolutely no income from clicks. The whole site is a project of charity, donated effort and work by a small community of people of various ideological persuasions (I am not one of them-100% scrub here). So any idea that the editors are driven by clicks is specious.
I, personally, think that having right wing writers is highly salutary. Even hack jobs like this gas price screed are really useful. It’s always nice to know where right wing thought is and sometimes ya can learn some useful things.Report
Thank you for the compliment.Report
You’re quite welcome, thank you for the post.Report
“So any idea that the editors are driven by clicks is specious.”
Why have a website if not get people to visit/read it? I was not speaking of ad revenue, but simply putting stuff out there, specifically hamfisted polemics such as the above post, without a greater agenda to grow a broader audience. Like I said, all I ever see are the same 5-6 hard right-wing libertarian adjacent weirdos who absolutely none else wants to hear from except the 5-6 feckless liberals that want to argue with them.Report
Submit a post that covers the topic you wish we knew more about.
Be the change you want to see in the world.Report
Would rather not be associated with posts like this one.Report
You can use a fake name like ACIS or something.Report
And yet, you’re here.Report
“Whatever Bidens’ admin has done or said their ability to effect oil prices is a lot more limited than anyone, left or right, likes to admit.” But it DOESN’T MATTER.
Who gets credit when the economy is humming? The President. He’ll hold a press conference and claim that his policies made the economy better. Who gets the complaints when the economy is in the dumps and people are out of work? The President. Dems the rules and dems the breaks. Happens to EVERY president (mostly), so this is all Biden’s fault and his problem to fix.Report
Heh, sure but we’re in the world of political commentary so pointing out that reality is real is fun. I would like to think that I would write a similar criticism if a left wing article was up blaming a Republican President for a given gas price level- though in all honesty I can’t say I’ve ever seen lefties blaming gas prices on Republican administrations. Have you?Report
I can’t say that no. I can say that I’ve said this in response to articles from the left side on this site.Report
Nope we don’t generally call republicans out for gas price increases because they don’t control the oil industry.
I do like pointing out, however, that inflation adjusted gas prices were still higher in 2008 under GWB.Report
I do like pointing out, however, that inflation adjusted gas prices were still higher in 2008 under GWB.
What happened in the 2008 election?Report
The quagmire of a futile foreign war and a collapsing economy dragged the President down to defeat.
The pullout of Afghanistan and the stimulus are looking better and better in hindsight.Report
Jen Rubin points out the same thing!
The public is rallying to Biden, she says.
Report
Per 538, Biden is underwater on favorability by fewer than 10 points after trending worse for a while.Report
If he keeps trending better, he’ll have coattails that will extend to congress.Report
It’s called a dead cat bounce in the finance world.Report
I doubt that that will last.Report
Sure… being “only” 10 points underwater ain’t nothing to whistle about. But he’s gained about 2 points there since Russia invaded Ukraine, so while it’s not everything, it’s also not nothing. Time will tell ultimately.Report
Have you seen The Daily Show’s take on Biden?
This is queued up to the segment in question. (It’s about countries in the Middle East not taking his calls.)
Report
Uh, yea, sure. What’s that got to do with anything we’re talking about here?
You shared an article about the public rallying to Biden in response to his Ukraine handling. I shared that polls seem to be supporting that.
Now you’re talking about his phone calls with Middle Eastern leaders? Um… why?Report
It might be the first time that I’ve seen The Daily Show compare Trump favorably to Biden.
I suppose it doesn’t matter.
Nobody watches The Daily Show anymore.Report
Who are you talking to?Report
I’m openly musing about how Biden is doing.Report
Gaining two points when you’re vastly underwater on every issue is called a dead cat bounce.Report
Quite possibly. Time will tell. Biden ain’t in a great place. He’s in a better place than he was a few weeks ago. And a worse place than most (all?) of Year 1 of his Presidency.
It ain’t a good place. It’s a bad place. We’ll see where things go.
ETA: You can call it a DCB and you may be proven right. If he continues trending up, it won’t be a DCB. It’s simply too early to tell.Report
Bush was ending his second term in that election. He wasn’t up.Report
Well since Bush wasn’t up for re-election nothing to hold him to account.Report
“in all honesty I can’t say I’ve ever seen lefties blaming gas prices on Republican administrations”
Seriously? “Bush’s wars”? It was like every hour for years.Report
So write us a post – using what he’s actually done so far and what his actual authority is – telling us what you want him to do to fix this.Report
Why don’t you?Report
MSNBC already did. You’ll find the link below.Report
I’m better in conversations than in prose–according to my lit major ex wife. I can’t write a transition sentence to save my life 🙂Report
You seem to do quite well here.Report
You’ve got those issues, and you’ve also got the international politics of oil. One of the quickest things that could at least mitigate would be for OPEC to increase production. Their hesitancy to do so IMO ought to result in a loss of military aid to the UAE and the Saudis but sadly we know that ain’t happening.Report
No, that doesn’t solve the problem. US production is ramping up because oil is so expensive. The futures market is where the price needs to come down first.Report
And the president controls the future market how?Report
Read the article, man. I answer that question.Report
You mean this:
It’s a lively phrase – but like everything else you wrote here it has no factual basis.
https://www.msnbc.com/msnbc/amp/rcna19751Report
Report
That’s about as useful as me airing Donald Trump’s access Hollywood tapes.Report
Useful to do what?
Demonstrate the power of the President to do something? No, it’s not useful for that.
Demonstrate that Biden made that signal at least once during his campaign for the Presidency?
Yes, I suppose it does do WAIT YOU BROUGHT UP DONALD TRUMP NOW I HAVE TO TALK ABOUT TRUMP FOR A WHILEReport
Just to make sure you don’t miss it – from that article:
Which FWIW is what happened when Trump inherited the Obama economy and kept it going.Report
I wonder what signal this sent to the futures market:
https://www.foxbusiness.com/markets/trump-saudi-arabia-russia-opec-oil-deal-role?fbclid=IwAR1WacZ7BRiLJZq1EcLZis2_RI5cYKwqV5IdV_nNlcOOdCCIG_lKX7BTz00Report
If I had to guess, off the top of my head, I’d say that it’d send a signal that gas prices were going to go up.Report
Since I can’t find any reporting that this has changed, how does this agreement impact current pricing?Report
I imagine that it has relieved the downward pressure that was being caused by a price war.
The signal that that price war was going to end probably signaled something like “okay, guys. We’re going to regress to the mean for a bit.”Report
so you don’t think that continuing to honor this agreement might have any influence on current gas prices since it is a controlling agreement on crude oil?Report
There are *MANY* signals that go into price.
This is, indeed, one of them. “These guys are having a price war!” is a big signal that supply will be (relatively) overabundant.
The price war ending is a signal that things will regress to the mean.
I absolutely agree with that… but if you’re hoping that I’ll agree with something like “AND THIS IS THE ONLY PRICE SIGNAL SENT SINCE wait let me check the date on the article APRIL 2020!!!!!”, then I’m not going to agree that this was the only price signal sent since April 2020.
I will say that the prices that were lower than the relatively local mean were going to regress to the relatively local mean after the price war ended.
I don’t think that I’d want to argue that the price war ending resulted in relatively local highs (and, indeed, highs that have people scrambling for their inflation calculators pointing out that this is only the SECOND highest that gas has ever been, not the HIGHEST).Report
https://nypost.com/2022/03/12/stickers-blast-biden-at-gas-pumps/amp/Report
They linked to the stickers in the article.
Those poor, poor gas station attendants. At least it’s warming up enough that they won’t have to scrape those stickers off in the cold.Report
If I had a sticker factory, I’d make one like that but with Putin instead of Biden.Report
They have them.
I imagine that they are about as irritating to have to scrape off as the Biden ones.Report