Stymied by inflation, Biden looks for enemies

Now, with gas skyrocketing, Biden’s instinct is to blame anyone but himself. But he is operating under some constraints. First, he is politically beholden to a coalition of liberal climate change activists who are pressing him to move away from fossil fuels and toward renewable energy as quickly as possible. They are, in fact, quite frustrated that Biden has not moved faster. They are not satisfied that Biden canceled the Keystone XL pipeline, that he stopped drilling in the Arctic National Wildlife Refuge, that he has taken steps to stop drilling on federal lands, that he has imposed higher drilling fees, and that he has increased regulation on the oil and gas industry. They want him to do more, now.

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So Biden cannot do anything his environmentalist supporters might perceive as going easy on the oil and gas business. And he certainly cannot blame his own lobbying groups for adding to the burdens of millions of people who rely on cars every day.

But Biden saw the price of gas going up, up, up throughout his first year in office. The average price of a gallon of gas in the United States was $2.38 in January 2021, when Biden took office, according to the Energy Information Administration. By the last week of February 2022, the price was $3.60. That was enough for millions to complain about.

Then, on Feb. 24, Putin invaded Ukraine. It was a heinous act that has led to incalculable suffering in Ukraine. And for a variety of reasons, it has led to rising oil prices around the world. The price of gas in the U.S., which had risen about $1.20 per gallon in Biden’s first year, rose another $1.40 after the Ukraine invasion.

Biden decided to blame Putin for all of it — the price of gas, as well as price increases in other areas, such as food. Last week, when the government reported that prices rose 8.6% on an annualized basis in May, Biden said: “Today’s inflation report confirmed what Americans already know: Putin’s price hike is hitting America hard.” It was almost like a punch line: Whatever happened, Biden stood ready to blame Putin.

But that gets old, and the public can see that it’s not entirely true. Now, Biden is branching out, searching for new enemies. And he just happens to have settled on the enemy most villainized by his liberal climate change supporters: the oil and gas industry. This week, Biden wrote a letter to the heads of Exxon Mobil, Shell, Phillips, BP America, Chevron, Marathon, and Valero accusing them of price-gouging “at a time of war.” (One might expect a president to use the phrase “at a time of war” when the U.S. is at war, which does not describe our situation, but Biden chose to use it anyway.)

Biden wants the companies to refine more oil and lower prices. And here is the amazing thing: In the process of villainizing the oil companies, he at least partially let Putin off the hook. Here is what Biden wrote: “Vladimir Putin’s war of aggression, and the bipartisan and global effort to counter it, has disrupted the global supply of oil and driven up the global price. But the sharp rise in gasoline prices is not driven only by rising oil prices, but by an unprecedented disconnect between the price of oil and the price of gas. The last time the price of crude oil was about $120 per barrel, in March, the price of gas at the pump was $4.25 per gallon. Today, gas prices are 75 cents higher, and diesel prices are 90 cents higher. The difference — of more than 15% at the pump — is the result of the historically high profit margins for refining oil into gasoline, diesel and other refined products. Since the beginning of the year, refiners’ margins for refining gasoline and diesel have tripled, and are currently at their highest levels ever recorded.”

Biden admits that a lot of the problem is due to a shortage of refining capacity, especially the fact that producers took a lot of capacity offline during the pandemic, when demand plunged. Now, he wants the industry to snap its fingers and get back to the old way. “I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office,” Biden wrote. “But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.”

Biden asked the companies to “take immediate actions” to increase the supply of gas and diesel. “Your companies need to work with my administration to bring forward concrete, near-term solutions,” Biden wrote. “In advance of that, I request that you provide the [secretary of energy] with an explanation of any reduction in your refining capacity since 2020.”

Finally: “The lack of refining capacity — and resulting unprecedented refinery profit margins — are blunting the impact of the historic actions my administration has taken to address Vladimir Putin’s Price Hike and are driving up costs for consumers,” Biden wrote. “I appreciate your immediate attention to this issue and your efforts to mitigate the economic challenges that Vladimir Putin’s actions have created for American families.”

So the president is still talking about “Putin’s Price Hike.” But he has now added to his villain list the companies that he says make Putin’s price hike worse. In doing so, Biden echoes the words of a former rival, Sen. Bernie Sanders (I-VT), who has been calling for high taxes and price controls on oil companies since the first days of the Russian war in Ukraine. (Of course, that’s the kind of thing Sanders has been calling for for decades now.)

“We can no longer allow big oil companies, huge corporations, and the billionaire class to use the murderous Russian invasion of Ukraine and the ongoing pandemic as an excuse to price gouge consumers,” Sanders tweeted two days after the invasion. “It is time to enact a windfall profits tax and reasonable price controls.”

Biden isn’t going that far. But he has come upon a basic conflict. His climate change activist supporters want the U.S. to rely less on oil and gas. But now the U.S. needs more oil and gas. Biden has tried to make his supporters happy, but he has for the moment bowed to the reality that the U.S. needs more oil and gas. He is asking the Saudis, whose leader he wanted to make a “pariah,” to help out. He is pushing the energy companies. He is looking for villains to condemn.

But he still has the problem. After Biden’s letter was released, the oil company analyst Patrick De Haan tweeted: “White House begs oil companies to improve situation. Can we drill? We’d rather you not. Can we build a refinery? We’d rather you not. Can we build a pipeline? We’d rather you not. Just make it better.”

That’s the Biden conundrum. The situation is getting worse, and instead of working to increase domestic oil and gas production, he’s struggling to find just the right people to blame. Anyone except himself.

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