Gasoline prices have soared since Biden came to power, and angry voters want to know why.
Could it be the record breaking gasoline demand, or perhaps the energy policies of the Obama administration that discourage the production of fossil fuels, or could it be those nasty pandemic profiteers The president thinks it's the latter.
Our economy re also going after the bad actors and pandemic profiteers on our economy. There is lots of evidence that gas prices are going down but they haven't, she said in a briefing on Thursday. In a quick, short, and more detailed way, we re looking at that. Energy experts are eager to see what he finds, because the majority, including myself, with 30 years of experience following commodities doubt there is any evidence at all.
Before I get into the nitty-gritty statistics, the one thing you have to remember about gasoline prices is that they are primarily driven by supply and demand. Since Biden has been the president, the demand for gasoline has went faster than the supply. The other thing you have to remember about gasoline prices is that they are influenced heavily by the cost of crude oil, which is the major component that affects gasoline prices. According to the Energy Information Administration, 55% of what you pay for gasoline is whatever the cost of crude oil.
If president, for example, cancels a pipeline or puts in a drilling moratorium for oil on federal land, there will be less oil available. Less supply increases gasoline prices, particularly if demand increases. When Biden took office on Jan. 20, the price of West Texas Intermediate crude was $53.24 a barrel, this week it hit the $73 - per-barrel level before going marginally to the $71 - per-barrel level on Friday.
That drove gasoline prices to a seven-year high of $3.13 a gallon, which was a dollar higher than the day Biden took office. He is sitting at $3.19 for an AAA gallon per gallon today.
Likewise, after Labor Day we phase out so-called summer blends of gasoline, which are more expensive. When you get to the fall, the blends of gasoline are cheaper and the gasoline demand decreases after Labor Day. That usually lowers the prices at pump.
Yet this year, this is not happening, largely due to the impact of Hurricane Ida and Tropical Storm Nicholas, both of which have taken a big toll on the US oil production and refiners that make gasoline. The EIA has reported that Ida caused nine refineries to start burning down and reduce production as well as sidelining 96% of all crude oil production in the Gulf of Mexico that is desperately needed to produce gasoline. How much gasoline can I use to produce it or you can't get the oil you need to make gasoline, then prices will be more expensive.
The other reason why gasoline prices have gone up so dramatically is that Biden, as leader of the free world, actively discouraged investment in fossil fuels. Even the International Energy Agency that just a few months ago stated that the world needed to stop all investment in fossil fuels if Biden's climate targets for the world were to be met admits that the lack of investment in traditional fossil fuels is already being felt in higher prices.
Biden making climate change one of his key issues is sending a signal to global energy producers to hang on to their dollars and not invest in fossil fuels and many other investors are listening.
If it had not been for Biden, those numbers would have risen faster.
The lack of fossil fuel investment will get worse if the Fossil Free Finance Act becomes law. The bill was introduced by Rep. Ayanna Pressley, Mass., with Democratic Rep. Mondaire Jones, D-N.Y. and Rashida Tlaib, Mich. which will amend the Bank Holding Companies Act to require the Federal Reserve to mandate, via regulation or guidance, that all bank holding companies with more than $50 billion in assets align their financing of greenhouse gas emissions and deforestation risk commodities with science-based emissions targets.
Phil Flynn is senior energy analyst at The PRICE Futures Group and Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, renowned professionals and institutions with up to the minute investment and risk management insights into global oil, gasoline, and energy markets. Phil can phone 1-888-264-5665 or by email: 888-851-5665.