116 3rd St SE
Cedar Rapids, Iowa 52401
On Thursday July 21, drivers of over 230 cars got to fill their gas tanks in Hiawatha for $2.38 a gallon. I was on vacation and didn’t get to be one of them, so I was a bit jealous. Like many Iowans, I’m feeling the proverbial pain at the pump. Filling up my Nissan used to run me somewhere around $28.00 if I really squeezed in every last drop. Just a few weeks ago, it cost me over $50 — and that was using a 20-cent fuel saver discount.
How did 230 drivers get to pay only $2.38 per gallon for gas when local prices were still hovering near four dollars? A political advocacy group that I volunteer for called Americans for Prosperity partnered with a local gas station to offer it for that amount for two hours as part of their “True Cost” initiative. $2.38 was the national average for a gallon of gasoline on the day President Joe Biden took office. The project was designed to bring attention to the failed policies of President Biden’s administration, which they’ve summed up in four words: Pay more, get less.
That’s what inflation is: Paying more for the product, getting less out of the dollar. Gasoline is but one of the products and services for which Americans are paying more. According to Forbes, the aggregate price of meat is up 11.7%. Fruits and vegetables are up 8.1%. Electricity is up 13.7%, even though generation capacity is declining in some areas. Some products have succumbed to “shrinkflation,” where products are selling for the same cost, but coming in smaller packages — Cottonelle brand toilet paper went from 340 sheets a roll to 312. Party-size Fritos packages have shrunk from 18 ounces to 15.5. Domino’s pizza reduced their $7.99 chicken wing special from 10 wings to 8.
Inflation sucks. But I’m not going to pretend that the current administration’s policies are the sole driver of inflation any more than I would believe them the sole cure. The price of goods and services, inflated or not, is driven by several things — in addition to policy, the balance of supply and demand, the cost of production, and the unfolding of global events can all have an effect.
The price of oil has seen both inflation and deflation in recent years. It’s hard to picture it now, but in April of 2020, oil prices crashed after Russia rejected a deal with OPEC+ to harness production and the market was flooded just as demand tanked due to worldwide COVID-19 shutdowns. At one point, the price of a barrel of oil went negative — companies had to pay buyers to take it off their hands and store it. Supercheap gas prices were great for consumers, but the supposedly greedy oil companies lost a combined $76 billion and had to lay off scores of employees.
But while political policy isn’t the sole driver of inflation or deflation, it plays a crucial role. In 2020, part of the fix for the wildly unstable oil market was to cut production in order to avoid a complete crash. Those cuts came in the form of deal negotiated by former President Donald Trump in what oil expert Dan Yergin called his “biggest and most complex” deal ever made and acted as a factor in settling the market.
The same influence wielded by President Trump to help still a spiraling market now rests in the hands of President Joe Biden. After denying responsibility only months earlier for the record soaring of gas prices nationwide — the President blamed everyone from Russian President Vladimir Putin to the owners of mom-and-pop gas stations, whose profit margins average only 15 cents on a gallon of gas — he seems more than happy to take credit for the welcome backslide that’s occurred over the last several weeks, boasting in a video posted to Twitter on Tuesday about his administration’s “actions” having played a large part.
The jury’s still out on that, but at least the president finally agrees that his policies can affect the price at the pump, a welcome departure from the “Putin price hike” rhetoric. Unfortunately, those policies, which include releasing millions of barrels of oil from the U.S. Strategic Petroleum Reserve and auctioning some off to other countries, are thought to have little actual effect on gas prices.
In fact, some of those policies stand to be a culprit for the high cost of energy, not the cure. Take canceling the Keystone XL pipeline on day one of Biden’s presidency, for example, a move at which even environmentally woke wonder boy Canadian Prime Minister Justin Trudeau expressed disappointment. The project was to transport up to 830,000 barrels of crude oil each day in an efficient and cost-effective manner. That loss for the U.S. and Canada is a win for Russia, which may be able to transport oil in vast quantities through its own pipeline soon — should the completed Nord Stream 2 pipeline ever become operational, the Russians will have Biden to thank in part for his waiving of sanctions on the builder only weeks after he canceled the Keystone XL.
Regulations put forth by the Biden Administration don’t exactly spell out a desire to bolster our participation in a healthy and thriving oil market, either. Russian pipelines are apparently OK, but drilling on American soil is a hard no. After attempting to raise climate-related cost estimates for oil and gas leases was found in federal court to be unnecessarily harmful to energy-producing states, the administration suspended the plans for those leases altogether. America needs more oil, but President Biden seems determined to do the opposite. What else should we expect from a president who pledged on the campaign trail “to get rid of fossil fuels?”
Gas prices have slid in the last month. That’s a good thing. But it’s hard to get excited when in most states the average cost still is double the national average from when President Biden took office. With no meaningful action from the administration to promote affordable energy and a market ravaged by pent-up demand, will Biden be as apt to take the credit when prices go back up? I doubt it. Success has many fathers, but failure is an orphan.
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