Dems push Biden to act on gas prices, but experts say options are limited

WASHINGTON (SBG) — Amid growing public frustration with rising gas prices, Democrats are pressing the White House to take more aggressive action to bring down fuel costs, but experts say it is unclear if the Biden administration can or should do much to address the complaints.

A group of Democratic senators sent a letter to President Joe Biden Monday urging him to “consider all tools available” to lower gas prices, including tapping the Strategic Petroleum Reserve or banning crude oil exports. They cast blame on the Organization of the Petroleum Exporting Countries for limiting supply and on domestic producers for sending U.S. oil overseas.

“In our home states, high gasoline prices have placed an undue burden on families and small businesses trying to make ends meet, and have proven especially burdensome as our constituents continue to recover from the economic fallout of the COVID-19 pandemic,” the lawmakers wrote.

Energy Secretary Jennifer Granholm opened the door to dipping into the nation’s crude oil reserves over the weekend, telling CNN the president was “looking at” the option. However, the White House was noncommittal on the subject Monday, signaling no major actions are imminent.

“We’re monitoring the prices and we’re making sure that we have tools in our toolbelts that we can try and use,” said White House deputy press secretary Karine Jean-Pierre. “But at this time, I don’t have anything new to share.”

Average gas prices nationwide ticked up to $3.41 per gallon over the last week, according to GasBuddy, and some areas are already seeing prices over $4.00. Fuel costs spiked over the summer as the economy reopened in the wake of pandemic-driven shutdowns, and demand has remained elevated, with prices per gallon now $1.31 higher than last November.

Demand for gas is unlikely to decline anytime soon, and OPEC projects supplies will lag well into 2022. However, experts expect dumping tens of millions of barrels from U.S. reserves into the market would make little difference at the pump.

“I think a release of an SPR would likely have a modest and short-lived impact on world oil prices, and let’s face it, it’s a global market,” said Mark Finley, an energy and global oil fellow at Rice University’s Baker Institute for Public Policy.

Coordinating a release with other countries that have emergency supplies could amplify the effect, but it would still be fleeting. Also, tapping into the reserve now would sap resources that might be needed in response to an emergency like a natural disaster or a war.

“It is true that the government could flood the market with fuel for a few months, resulting in temporary decreases in pump prices,” said Richard Shaten, an expert on environmental economics at the University of Wisconsin-Madison. “In my opinion, this would be like using up your personal emergency fund to buy extra desserts at the grocery store.”

Granholm indicated Biden’s actions would be guided partly by the Energy Information Administration’s analysis of short-term energy costs heading into winter. The report, released Tuesday, projected prices of oil and natural gas would likely remain around their current levels for several months before declining in early 2022, although it acknowledged much would depend on temperatures and demand for heat.

A surge in home heating costs could exacerbate the strain on households that are already coping with higher prices for groceries and other consumer goods. It may also increase the political strain for a White House struggling with public perceptions that it is not doing enough about economic challenges.

There might not be much more President Biden can do about it, though. U.S. efforts to spur additional production from OPEC failed last week, and experts doubt federal action could have much immediate impact on fuel costs.

The U.S. previously banned most oil exports from 1975 to 2015, but booming domestic production led Congress to lift restrictions on exports. When the ban was in place, Finley noted gas prices at the pump still tracked with the global market, so reinstating it as Democrats proposed might not have the desired effect.

Instead, Finley suggested the White House could engage with domestic fossil fuel producers to increase drilling. They have been reluctant to do so despite rising prices and it would take several months to ramp up production, but it could eventually ease U.S. reliance on the whims of OPEC and its allies.

“While it may not be a quick fix for prices in the next couple of weeks, it may have implications down the road,” he said.

Politically perilous as the rise in fuel costs may be, Shaten cautioned against overreacting to prices that are not that high by historical standards. Inflation in gas prices over the last 40 years has been far smaller than for other products, but the fluctuations in the market are sometimes felt more acutely by consumers.

“When the prices trend downward, the general public feels a subconscious level of euphoria,” he said. “When the price spike upwards, it’s a general level of panic.”

According to Finley, the political crisis currently vexing the White House underscores how difficult the transition to renewable energy could be in the years ahead. Leaders like Biden who want to address climate change will have to balance investments in new energy sources with ensuring the supply of fossil fuels is sufficient to keep prices down and avert a backlash from voters.

“No politician who fails to deliver on secure, reliable, affordable energy today will stay in office long enough to successfully tackle the long-term challenge of climate,” Finley said.