Taking no blame for the rise in energy and fuel prices during his Presidency, President Joe Biden has asked the Federal Trade Commission (FTC) to investigate whether the oil and gas industry is responsible for the recent sharp increases in gasoline prices.
Gas prices are more than $1 higher at present than they were in December 2020. Prices are above $5 per gallon in some parts of the country.
Biden Demands Investigation
Biden says there is a disconnect between retail gasoline prices and recent price declines throughout the supply chain for oil and gas, in a November 17th letter to the FTC.
“[P]rices at the pump have continued to rise, even as refined fuel costs go down and
industry profits go up,” said Biden’s letter. “Usually, prices at the pump correspond to movements in the price of unfinished gasoline, which is the main ingredient in the gas people buy at the gas station.
“But in the last month, the price of unfinished gasoline is down more than 5 percent while gas prices at the pump are up 3 percent in that same period,” wrote Biden. “Meanwhile, the largest oil and gas companies in America are generating significant profits off higher energy prices, [and] the two largest oil and gas companies in the United States … are on track to nearly double their net income over 2019— the last full year before the pandemic.”
These facts combine to merit an investigation of the oil industry for possible price gouging, concludes Biden.
“I do not accept hard-working Americans paying more for gas because of anti-competitive or
otherwise potentially illegal conduct,” wrote Biden. “I therefore ask that the Commission further examine what is happening with oil and gas markets, and that you bring all of the Commission’s tools to bear if you uncover any wrongdoing.”
Increase Domestic Production
Biden own energy policies are largely responsible for current high gasoline prices, a fact that won’t be changed with an FTC investigation designed to merely shift blame for higher prices to oil and gas companies, said Frank J. Macchiarola, senior vice president of Policy, Economics and Regulatory Affairs for The American Petroleum Institute, in a November 17 letter.
“This [investigation] is a distraction from the fundamental market shift that is taking place and the ill-advised government decisions that are exacerbating this challenging situation,” says Macchiarola’s letter. “Demand has returned as the economy comes back and is outpacing supply. “Further impacting the imbalance is the continued decision from the administration to restrict access to America’s energy supply and cancel important infrastructure projects,” Macchiarola writes. “Rather than launching investigations on markets that are regulated and closely monitored on a daily basis or pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas.”
‘Worse Than Nothing’
President Biden has waged war on reliable, affordable energy since stepping into office, says Katie Tubb, senior policy analyst at The Heritage Foundation.
“Ninety percent of Americans’ transportation fuel is met by oil,” said Tubb. “Oil is a globally traded commodity, such that Americans cannot totally insulate themselves from price increases. “While there is only so much any President can do about energy prices, this President has done worse than nothing,” said Tubb. “Rather than relieve regulatory roadblocks to affordable energy, for instance by lifting the Jones Act and the ethanol mandate, President Biden has used his bully pulpit from day one to vilify the oil industry and has aggressively deployed regulators across the executive branch to make it more difficult to produce, transport, and use oil.”
The climate and energy programs Biden continues to push are likely to further restrict domestic oil and gas prices, resulting in even higher prices, says Tubb.
“Biden continues to act as booster for the so-called Build Back Better bill, which would add new fees and regulations on oil producers and cut access to oil off American coasts,” said Tubb. “When President Biden finds Americans are upset with high gasoline prices, he has looked for harmful shortcuts like releasing oil from the Strategic Petroleum Reserve and shifting the blame to oil companies in the United States.
“The Obama administration told Americans they could not drill their way to lower gasoline prices, which experience under President Donald Trump proved wrong,” said Tubb. “The Biden administration is routinely telling Americans they shall not do so, being either unwilling or unable to see the policies they are pushing put them in direct conflict with the interests of the American people for affordable, reliable energy—now reality is bumping up against this administration’s incompetent and counterproductive climate policies.”
‘Market They Don’t Understand’
President Biden’s willful misunderstanding of how markets work is causing hard-working Americans to suffer, says Gary Stone, vice president of Engineering at Five States Energy.
“Politicians on both sides of the aisle have always ignored oil and gas companies and their employees when prices were low,” said Stone. “But since the formation of OPEC, oil pricing has been a complex international financial and political exercise–a delicate balance of supply, demand, and raw speculation.
“Biden is only the latest in a string of Democrat Presidents who are quick to point the finger at oil and gas companies, to blame ‘someone’ for a market they don’t understand,” Stone said. “Nothing will come of Biden’s demanded investigations, which will quietly go away and, unless politics interferes further, the market will soon balance prices.”
Kenneth Artz (KApublishing@gmx.com) writes from Dallas, Texas.
As a (retired) 35+ year veteran of regulatory & compliance (upstream) in the oil & gas industry, the biggest “driver” at the federal level is lack of understanding. The State agencies that predominantly regulate oil & gas operations across the country have a good handle on issues. Very few politicians in D.C have much knowledge of oil & gas at all…