A major American energy lobby has taken aim at a presidential Twitter post that called on gas stations to cut prices at the pump, with the U.S. Oil and Gas Association telling President Joe Biden that they’re “working on it” and that the author of the post should go back to school to learn basic economic fundamentals.
“Have a Happy 4th and please make sure the WH intern who posted this tweet registers for Econ 101 for the fall semester,” the energy group said in a post on Twitter on Sunday.
What appeared to be a sarcastic reaction by the energy group was prompted by a fiery July 2 post from Biden, who called on gas stations across the country to charge customers less.
Biden’s official presidential Twitter account wrote that he has a “message” to gas stations: “This is a time of war and global peril. Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.”
Besides the U.S. Oil and Gas Association posting a critical response to Biden’s message for gas station owners, Amazon founder Jeff Bezos’s reaction also suggested a need for some more schooling.
“Inflation is far too important a problem for the White House to keep making statements like this. It’s either straight ahead misdirection or a deep misunderstanding of basic market dynamics,” Bezos said on Twitter.
According to IbisWorld, the average gas station profit margin is just 1.4 percent. They make most of their profits thanks to markups on items sold in gas station convenience stores, according to an analysis by The Hustle.
‘Bring Down the Price’
Political pressure has been mounting on Biden as soaring prices at the pump have left American drivers frustrated, while consumers more broadly face a cost-of-living crisis amid the highest inflation in 40-plus years.
The price of gasoline is around double what it was when Biden took office, with the president variously blaming oil industry greed, a lack of refining capacity, global supply shortfalls set against a sharp post-pandemic rebound in demand, and the war in Ukraine.
Besides leaning on OPEC to pump more oil and releasing crude reserves from the national strategic stockpile, Biden has called on refiners to boost output and has increasingly ramped up rhetoric against gas station owners, demanding they drop prices.
Biden recently issued a call to gas station owners to “bring down the price you are charging at the pump to reflect the cost you are paying for the product.”
“Do it now. Do it today. Your customers, the American people, they need relief now,” Biden said at a White House press conference on June 23, in which he also called for a federal gas tax holiday and urged oil companies to use their profits to boost refining capacity.
‘Killing Both Oil and Refinery Expansion’
But some experts say that for the oil industry to make the kind of major investments required to expand capacity is difficult under a hostile political environment.
California gubernatorial candidate Michael Shellenberger said in a series of Twitter posts that the reason high oil and gas prices aren’t leading to increased oil production and refining is simple: “President Biden has actively prevented it since taking office in the name of climate change.”
“Biden accused gas stations of over-charging, but their prices reflect the price of gasoline set by the market, and the market reflects the lack of supply which was created by Biden killing both oil & refinery expansion,” Shellenberger argued.
Gifford Briggs, a regional director for the American Petroleum Institute, told The Advocate in a recent interview that refineries in the United States are are running at around 95 percent capacity, and that for them to expend capital to boost capacity requires a stable future outlook.
“To increase our refining capacity is not simply going and putting another storage tank at a facility,” he told the outlet. “These are multiyear projects that are multiple billions of dollars and decisions that companies make with a look to the long-term and not as a reactionary measure.”
Shellenberger also argued that it’s possible for Biden to boost near-term crude production and refining “significantly” in three ways: Accelerate the permitting process for oil and gas projects by invoking the National Defense Act for Oil and Gas; commit to refilling the strategic petroleum reserve at a minimum of $80 per barrel, which Shellenberger said would “be a powerful incentive for the oil guys;” and announce LNG supply contracts with international partners, which he said would incentivize natural gas production.
The notion that the Biden administration’s anti-fossil fuel posture and policies have fanned the flames of high prices at the pump has been echoed by a number of energy experts.
“It’s not the war in Ukraine. It’s really domestically caused constraint on the supply side,” said Ross McKitrick, a professor of economics at the University of Guelph in Ontario and expert on energy and environmental policy, in a recent interview with The Epoch Times.
“Nobody’s willing to invest in expanding refinery capacity because the outlook from everything that the government has said is you won’t get the approvals,” he added.
McKitrick’s view was echoed by Chevron CEO Mike Wirth, who said in a recent interview that he does not believe another oil refinery will be built again in the United States, arguing that government policies are the key factor.
“We’ve seen refineries closed. We’ve seen units come down. We’ve seen refineries being repurposed to become bio refineries. And we live in a world where the policy, the stated policy of the U.S. government, is to reduce demand for the products that refiners produce,” Wirth said.
Besides leaning on gas station owners, jawboning refiners, and pleading with OPEC, the Biden administration last week announced 11 potential new leases for oil and gas drilling in the Gulf of Mexico and off the coast of Alaska.
But the Interior Department’s proposed plan, which has been opened for public comment, also features a zero-new-leases option while removing from consideration any new leases in federal waters off the Atlantic and Pacific coasts.
This stands in stark contrast to the policies of former President Donald Trump, who sought to expand domestic fossil fuel production to keep pump prices low and as a matter of national security.