WASHINGTON, DC - JANUARY 27: U.S. President Joe Biden speaks about climate change issues in the ... <+> State Dining Room that the White home on January 27, 2021 in Washington, DC. Chairman Biden signed numerous executive orders related to the climate readjust crisis ~ above Wednesday, including one directing a pause on new oil and also natural gas leases on public lands. (Photo through Anna Moneymaker-Pool/Getty Images)

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No short article of mine has actually generated more views and much more reader feedback 보다 my item in in march of this year: who Is to Blame For increasing Gasoline Prices? at present, there are nearly 900,000 views, and I proceed to gain reader feedback end this post on a weekly basis.

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The feedback is invariably from men who are angry that Joe Biden is in the White House and also it is follow me the lines of “I bet you feeling stupid now” or “Even one idiot have the right to see that Biden is the one that drove up gasoline prices.”

Let’s attend to the apparent fact first. Gasoline prices room indeed higher this year. In fact, the average retail petrol price is currently $1.02/gallon higher than it was a year ago. The price is higher than at any time because 2014. I think the magnitude of the change, more than anything, has convinced human being that Biden need to be responsible because that this.

Initially, ns would communicate the hostile feedback. I have actually this probably naïve id that if world merely recognize what ns am in reality saying they will certainly come about to my suggest of view. And also invariably that would happen. After ~ a couple of exchanges, they would say “OK, i agree with what you room saying.” i engaged fifty percent a dozen readers, and in every instance they backed far from their initial angry reaction.

But it’s no a fertile use of my time come convince reader one by one that they are operating under misconceptions. Ns ultimately made decision to compose this short article to deal with some the the most common misconceptions.


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The gist the the post is the there are couple of actions a president have the right to take to influence gasoline price in the quick term. Those couple of actions historically have been 1). Relax oil indigenous the strategic Petroleum Reserve; 2). Boost gasoline taxes; or 3). Engage in a war in the center East.

President Biden walk none the those, but he did take actions the were enemy to the oil and gas industry, thus driving the belief that this journey up petrol prices.

President Biden’s power Policies

First, instantly upon suspect office, president Biden cancelled the Keystone XL pipeline permit. The project had been rubbish by chairman Obama in late 2015, fast-tracked by chairman Trump in 2017, and now once much more rejected by chairman Biden in 2021.

Then, Biden suspended new oil and gas leasing and also drilling patent for commonwealth land and water.

Those actions, reader were quick to point out, were plainly were behind the climb in gasoline prices. I was willfully blind no to watch that, ns was told.

Look, ns am no defending president Biden’s power policies. Ns had currently been critical of Biden’s energy decisions. In January I had actually written The Inherent dangers In president Biden’s energy Plan, which criticized moves prefer the Keystone XL cancellation. Therefore I totally understand just how these decision can affect oil and gasoline price in the longer term — however not in just months.

For those that insisted the Biden’s plot had conveniently driven up petrol prices, ns asked them come explain. They would certainly respond that these moves might eventually limit oil supplies. True, yet not because that years. Keystone XL could have influenced oil provides a te from now. The oil markets don’t reaction in actual time to occasions like this.

The drilling permits potentially have actually a shorter term impact, yet even climate companies have actually stockpiled year of permits in anticipation of such a relocate (as defined here).

If a hurricane is brewing in the Gulf that Mexico, oil prices will certainly react. If meteorologists estimate 50% an ext hurricanes in the Gulf the Mexico over the following decade, oil prices won’t react. If a country bans internal combustion engines 15 years from now, oil prices won’t reaction today.

If Keystone XL would mitigate oil offers in the future, why wouldn’t it influence oil price today? Primarily since we don’t understand the oil supply/demand snapshot at the moment Keystone XL would have been completed. The oil markets react to move by OPEC the quickly affect oil supplies, not to actions that may impact oil gives in the lengthy run — at a time we don’t recognize what oil demand will be.

The Oil/Gas Price Correlation

Let’s look at the past 20 years of gasoline prices matches the price per barrel that West Texas intermediary crude oil.

The price of sleeve gasoline versus West Texas intermediate crude oil.

Robert Rapier

This graphic shows a high level of correlation in between the price that oil and also the median retail price of gasoline. Exactly how high is this correlation? according to my Excel analysis, it’s a lining 96.8% over the past 20 years. In other words, transforms in gasoline prices are almost exclusively correlated with underlying changes in oil prices.

Exceptions can take place if there are quick term refinery outages (which would often tend to diminish oil prices and also increase petrol prices) and also seasonal transforms in gasoline (which can independently impact gasoline prices) yet the bottom heat is “If you want to understand what’s happening with gasoline prices, look come oil prices.”

So, those the Explanation?

Note once oil and gasoline prices started to rise. That climb started in may 2020. Between the an initial week of might 2020 and the last week that December 2020, oil prices had actually tripled. To be President Trump come blame because that this?

No, the reason oil and gasoline prices climbed is that the economy started come open back up from the Covid-19 shutdowns. Those shutdowns had actually negatively influenced a couple of million barrels that U.S. Oil supplies, and also those gives were slow to bounce ago once the economic situation opened earlier up. That’s why we have soaring oil and gasoline prices.

Keep in mind the the entire human being has proficient this. Do human being honestly think that cancellation the the Keystone XL pipeline journey up gasoline prices in Tokyo? Further, this price rise has taken place throughout most commodities. We have seen soaring lumber prices, base metals prices, cotton, oats, street — all primarily connected with the Covid-19 effects on the economy.

The Oil market has grew This Year

One significant irony is the if you are a support of the U.S. Oil industry, you should cheer higher oil prices. Low oil price in current years drove plenty of producers the end of business. Indeed, under chairman Trump, the share price of oil producers languished. Again, i am no blaming him because that this. That a role of the macro components that affected oil prices.

This year, oil prices have risen, and also so have the share price of oil producers. Because that example, ConocoPhillips, the world’s biggest independent publicly traded pure oil and also gas company, has risen 64% year-to-date. Other oil companies have actually experienced comparable gains. Have to they say thanks to Biden? No, because he isn’t the reason oil prices rose.

But, I will certainly reiterate something ns pointed out earlier this year. Either Biden is driving up petrol prices, which helps the U.S. Oil industry, or Biden’s policies have nothing to carry out with greater gasoline prices, and thus his plans are doing nothing to aid the U.S. Oil industry.

It is in fact the latter. Regardless of the sharp climb in the price of gasoline this year, Biden deserves neither the credit transaction nor the blame — return in the much longer term his plans are likely to command to greater future gasoline prices.

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Robert Rapier is a chemical engineer in the power industry. Robert has 25 years of international design experience in the chemicals, oil and gas, and also renewable power industries, and also holds number of patents regarded his work. That has operated in the areas of oil refining, oil production, man-made fuels, biomass come energy, and also alcohol production. That is author of energy Forecaster at Investing Daily, and of the publication Power Plays: Energy choices in the period of top Oil. Robert has showed up on 60 Minutes, The background Channel, CNBC, business News Network, CBC, and also PBS, and his energy-themed posts have appeared in plenty of media outlets, including the wall Street Journal, Washington Post, Christian scientific research Monitor, and also The Economist.