The White House has increasingly blamed gas prices and high inflation on what it calls “Putin’s price hike,” but the phenomenon began well before the Russian invasion of Ukraine.
Consumer prices increased 8.5% in the 12 months ending in March, a number that is sure to fuel consumer anxiety and erode support for President Joe Biden’s agenda. White House press secretary Jen Psaki told reporters before the numbers were released that March’s inflation would “be extraordinarily elevated due to Putin’s price hike.”
INFLATION RISES TO 8.5% IN MARCH, HIGHEST IN MORE THAN FOUR DECADES
“We expect a large difference between core and headline inflation, reflecting the global disruptions in energy and food markets,” she said.
However, inflation has risen steadily since Biden took office, starting at 1.4% the month he was sworn in, reaching 5% by May, 7% by November, and now 8.5%. Gas prices, which Russia sanctions most directly affect due to the country’s status as a major oil exporter, were also high ahead of the invasion.
In November, Biden tapped the Strategic Petroleum Reserve in an effort to bring prices down, lashed out at oil companies he said were reaping too-high profits, and called for a Federal Trade Commission investigation to “consider whether illegal conduct is costing families at the pump.” Russia’s invasion of Ukraine began Feb. 24.
“Inflation has been up every month that Biden has been president,” said Republican strategist Doug Heye, adding that “the public is not buying” the “Putin’s price hike” line.
Gas prices continued rising after the invasion, going from about $2.31 per gallon when Biden took office to $3.44 in November and about $4.11 on average today.
Along with more petroleum reserve taps, the Biden administration will allow 15% ethanol gas to be sold this summer and is spending about $800 million to subsidize biofuel production. The administration estimates E15 to be 10 cents cheaper per gallon than gasoline.
Whether that’s enough of a difference for voters concerned about rising inflation remains to be seen. Food prices are up 8.8% year over year overall, with the price of meat up 13.7% and cereal and bakery products up 9.4%.
“These moves are a Band-Aid,” Heye said. “It won’t stop the bleeding, but clearly the administration feels they need to do something.”
A recent NBC News poll found that 68% of voters listed inflation and economic concerns as their top priority, compared to 29% who listed the war in Ukraine. A Morning Consult poll found that 46% of respondents had more confidence in Republicans to handle inflation, whereas 32% had more confidence in Democrats.
Boosting biofuels will also help the administration’s standing with farmers in the Midwest, a key region for Biden. But it also cuts against other Democratic priorities. E15 is typically banned in the summer due to pollution concerns, and any effort to lower gas prices is out of step with long-term progressive goals of transitioning to clean energy. One of Biden’s first moves in office was to cancel the Keystone XL oil pipeline.
But when the rubber meets the road, voters are more worried about today’s prices than far-off environmental goals, argues Democratic strategist Brad Bannon.
“I think the price of gas supersedes everything right now,” he said. “It’s a tough situation, and you’ve got to make choices. And that’s what presidents do.”
Bannon praised the moves and predicts that when paired with state-level gas tax holidays, they’ll make a difference for voters. He thinks there’s still time for the administration to make progress if inflation can ease to 5% or so before the midterm elections.
Since corn is a big ingredient in E15, there’s a risk the ethanol move may only shift high prices from one area to another. The cost of any products containing corn will likely rise — as will the cost of beef from cows who feed on it, said Cato Institute Director of Tax Policy Studies Chris Edwards.
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“Biden always claims he’s for fairness for average Americans and against the corporate lobbyists and rich people abusing the system,” he said. “But his actions on biofuels are the opposite. They give more subsidies to already wealthy farmers and big biofuel corporations at the expense of average motorists.”
