While Americans are buying record high gas prices, our oil companies are producing record high amounts and making record breaking profits. In case you’re not an economist, that doesn’t make sense.
Joe Biden has shipped five million barrels from the United States’ Strategic Oil Reserve abroad, after claiming that releasing them would help ease Americans’ pain at the pumps.
The president faces accusations of a sneaky sleight of hand as it was revealed that between a fifth and a sixth of the reserve oil he bragged about releasing to boost supply made its way offshore to Europe and Asia in June.
Biden authorized the release of a million barrels a day from April onwards. But his action has done little to combat soaring gas prices, with the national average sitting at $4.74 as of Tuesday – still far above the $2.28-a-gallon average from just before he took office.
Biden’s announcement about releasing the oil barrels was made in April, and saw him say: ‘These releases will put more than one million barrels per day on the market over the next six months, and will help address supply disruptions caused by Putin’s further invasion of Ukraine and the Price Hike that Americans are facing at the pump.’
But it has had little effect, with a closer look at the press release revealing that the oil released from the strategic reserve was always destined for the highest bidder – even if they were overseas.
That is due to strict international rules dictating the sale and supply of oil – although a regular American who listened to Biden’s proclamation in passing would likely have believed that the increase in supply would have been destined for domestic refineries, to lower US prices.
‘Crude and fuel prices would likely be higher if (the SPR releases) hadn’t happened, but at the same time, it isn’t really having the effect that was assumed,’ said Matt Smith, lead oil analyst at Kpler.
Government officials continue to defend Biden, and claim domestic gas prices would be even higher were it not for his release.
Biden declared that he had authorized the largest-ever release of oil from the Strategic Petroleum Reserves (SPR), to put one million additional barrels on the market per day on average, every day, for the six months from April.
‘With these announcements, President Biden is demonstrating both his unwavering commitment to doing everything in his power to ease the pain American families are facing today at the pump as a result of Putin’s Price Hike, while continuing to take strong action – right now and without delay – to achieve lasting American energy independence,’ the White House said in a statement
Biden has repeatedly used the phrase ‘Putin’s Price Hike’ in a bid to deflect the blame for soaring inflation, despite strategists warning that it is not connecting with voters.
They’ve said he needs to show more empathy for the economic pain Americans are facing, rather than just trying to deflect.
U.S. crude futures are above $105 per barrel and gasoline and diesel prices above $5 a gallon in one-fifth of the nation.
Biden on Saturday renewed a call for gasoline suppliers to cut their prices, drawing criticism from Amazon founder Jeff Bezos.
Bezos said Biden’s words displayed an apparent ignorance of America’s free-market economy, where demand and supply always dictates the prices of goods.
But while the flow is draining the SPR, which last month fell to the lowest level since 1986, a significant percentage is flowing abroad.
The fourth-largest U.S. oil refiner, Phillips 66, shipped about 470,000 barrels of sour crude from the Big Hill SPR storage site in Texas to Trieste, Italy, according to U.S. Customs data obtained by Reuters.
Trieste is home to a pipeline that sends oil to refineries in central Europe.
Atlantic Trading & Marketing (ATMI), an arm of French oil major TotalEnergies, exported two cargoes of 560,000 barrels each, the data showed.
At least one cargo of crude from the West Hackberry SPR site in Louisiana was set to be exported in July, a shipping source added.
U.S. officials have defended their actions, saying that oil prices could be higher if the SPR had not been tapped.
The latest exports follow three vessels that carried SPR crude to Europe in April, helping replace Russian crude supplies.
U.S. crude inventories are the lowest since 2004 as refineries run near peak levels.
Refineries in the U.S. Gulf coast were at 97.9 percent utilization, the most in three and a half years.
On Monday, U.S. energy producers hit back at Biden after the president tweeted that ‘companies running gas stations’ should simply ‘bring down the price you are charging at the pump’.
Biden tweeted from his official White House handle on Saturday: ‘My message to the companies running gas stations and setting prices at the pump is simple: 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.’
The U.S. Oil & Gas Association replied: ‘Working on it Mr. President.
‘In the meantime – have a Happy 4th and please make sure the WH intern who posted this tweet registers for Econ 101 for the fall semester.’
Bezos said Biden’s remarks amounted to ‘either straight ahead misdirection or a deep misunderstanding of basic market dynamics.’
‘Ouch. Inflation is far too important a problem for the White House to keep making statements like this,’ the US billionaire tweeted on Saturday.
Gasoline prices at the pump have become a symbol of broader price rises in the United States, and they are sapping Biden’s approval rating ahead of midterm elections in November.
Biden has regularly attacked oil companies, saying they only care about profits and not the well-being of the average consumer.
The companies say in turn they have increased production to try to tame prices but that these are set on the world market and are subject to dynamics that are not under the control of US oil giants.
The Biden administration, in turn, hit back at Bezos on Sunday, with John Kirby, the National Security Council Coordinator for Strategic Communications, saying his boss would take ‘great exception’ to being accused of misdirecting the American people.
‘The American people are facing pain at the pump, clearly, now we’re at what – $5 per gallon? And the president is working very, very hard across many fronts to try and bring that price down,’ Kirby told Fox News.
He highlighted Biden’s initiatives toward lowering gas prices in recent months, all of which had done little to abate the surge that only subsided within the last three weeks.
Working with G7 leaders toward a price cap on Russian oil, releasing record numbers of oil the US’s Strategic Petroleum Reserve and calling on Congress to pass a three-month summer gas tax holiday are the measures Kirby listed.
‘If everybody cooperates on this, we can bring the price down at least by about a dollar a gallon,’ he claimed.
Kirby said Biden ‘knows the impact high gas prices have on the American household.’
Asked specifically about Bezos’ ‘misdirection’ accusation, Kirby said ‘anybody who knows President Biden knows he’s plainspoken.’
‘He tells you exactly what he’s thinking and in terms that everybody can understand,’ Kirby said.
‘So I think we obviously take great exception at the idea that this is somehow misdirection.’
‘The president is speaking honestly with the American people about what he’s trying to do to bring the prices down but he was honest even before the invasion.’
White House Press Secretary Karine Jean-Pierre also defended Biden, and said on Twitter on Sunday that oil prices have dropped about $15 a barrel over the past month.
‘But prices at the pump have barely come down. That’s not ‘basic market dynamics.’ It’s a market that is failing the American consumer,’ she wrote.
Gasoline prices have been above $5 a gallon since early June, which is unprecedented in the car-crazy nation.
Prices have fallen slightly since, but remain far from the $3 a gallon level of a year ago.
Biden’s tweet came amid the July 4th holiday weekend where Americans are paying an average of $4.81 for gas as of Sunday.
The president’s statement was also mocked by Chinese state media reporter Chen Weihua.
The communist mouthpiece sent a sarcastic tweet highlighting how Biden was seeking to undermine the principles of supply and demand which dictate prices in a free-market economy like that of the United States.
Weihua tweeted: ‘Now US President finally realized that capitalism is all about exploitation. He didn’t believe this before.’
The reporter tweeted something similar to Biden in 2021 when he responded to the president’s tweet that read: ‘Let me be clear: capitalism without competition isn’t capitalism. It’s exploitation.’
Weihua wrote then: ‘Capitalism is all about exploitation. Period.’
Another of those who responded was Texas Senator Ted Cruz who tweeted:’My message to the guy running your teleprompter. It’s YOUR fault. Reverse the dozens of executive orders, regulations & agency actions targeting American energy, and gas prices will fall… FAST. #Bidenflation.’
The president made a similar plea to oil giants in a June 22 speech that read in part: ‘These are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product.’
Biden begging for companies to reduce prices comes shortly after his administration failed to sell even his own party on a 90-day gas tax break.
According to an NBC report, if the tax break went ahead, the average American would only save 12 cents per gallon.
As the price of gas continues to skyrocket for American consumers, the Wall Street Journal reported earlier this week that the Biden administration ‘plans to block new offshore oil drilling in the Atlantic and Pacific oceans.’
Since March 2022, the president has sought to lay the blame for inflation at the feet of Russian President Vladimir Putin calling inflation: ‘Putin’s price hike.’
A Democratic Party strategist told Politico in June that the catchphrase was not resonating with voters saying: ‘It’s not meeting voters where they are. It’s much more important to feel their pain than explain it.’ The article quoted other strategists who said that the phrase sounded more like ‘blame-shifting than problem-solving.’
Last money, Federal Reserve Chair Jerome Powell broke with the Biden administration in admitting that inflation was already high prior to Russia invasion of Ukraine in February.
Although the plan does allow for oil companies to lease drilling areas in the Gulf of Mexico and in Alaska’s Cook Inlet until 2028.
Back in 2020, while Biden was running for president, his campaign promised to stop new oil and gas drilling on federal land and water.
In a one-on-one debate with fellow Democrat Bernie Sanders, Biden said: ‘No more drilling on federal lands, no more drilling, including offshore – no ability for the oil industry to continue to drill – period.’
During an appearance at the New Orleans Saturday for the Essence Festival of Culture, Vice President Kamala Harris told WDSU that lowering the price of gas is ‘probably’ the Biden administration’s top priority.
Harris said: ‘The President and our administration’s probably highest priority is bringing down the price of gas and cost of living.’
Meanwhile earlier this week at a NATO summit in Madrid, Biden said Americans will have to put up with high gas prices for ‘as long as it takes’ due to Russia’s invasion of Ukraine.
Following those remarks, New York Republican Congressman Andrew Garbarino took aim at the president attempting to blame Russia’s invasion of Ukraine for the price of gas on Fox Business Network’s ‘Mornings with Maria.’
Garbarino also said: ‘In November 2020, gas prices were around 43 — a barrel of oil was $43 a barrel. And now, a month before Putin invaded Ukraine, it was $87. So, it was already doubled in one year of his presidency.’
The congressman went on to call Biden’s excuses ‘a joke.’