The Biden administration and progressive Democrats continue to march down the oil and natural gas supply chain, pointing fingers and placing blame for high gasoline prices – all while calling for increased domestic production. While the target of these accusations has shifted every few months, the mixed messages on U.S. oil and natural gas production have remained constant.
First, it was the oil producers.
In March, White House Spokesperson Jen Psaki accused oil companies of making the “calculated decision” to hold back domestic energy production:
“The oil and gas industry right now is receiving profit — windfall profits; we’ve seen that. And instead of keeping up with current demand, too many of these companies, in our view, are making the calculated decision of returning money to investors and shareholders through buybacks and dividends, instead of expanding production enough in the short term.”
A group of legislators led by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Ro Khanna (D-Calif.) took things a step further and introduced a windfall profit tax bill to curb alleged gas price gouging:
“A windfall tax combined with a rebate to consumers would curb Big Oil’s greed and deliver immediate relief to families struggling with high gas prices. […] We ask that you work with us to pass a windfall tax and rebate legislation into law to help working families and prevent further profiteering from Big Oil.”
But allegations of price gouging and intentional suppression of supply were universally debunked by experts. Academics, economists, industry leaders, and bipartisan legislators were quick to remind the Biden administration and others that the price of oil is set by a global marketplace, and price controls in the form of a windfall profit tax would likely result in even higher prices at the pump. Many observed that the calls for “short term” production increases seemed completely at odds with the administration’s track record of undermining and blocking domestic oil and natural gas production.
Next, it was the refiners.
In June, President Biden took aim at refiners in a letter, alleging that the companies were making exorbitant profits and passing along excess costs to consumers:
“At a time of war – historically high refinery profit margins being passed directly onto American families are not acceptable… Companies must take immediate actions to increase the supply of gasoline, diesel, and other refined product.”
Never mind the fact that in June, refineries in the United States were producing gasoline with near-record efficiency. When President Biden wrote his letter to refiners, Energy Information Administration data show that refineries were operating at 94 percent of capacity and producing more gasoline and diesel than U.S. demand.
Most recently, it was the gas station owners.
In July, President Biden published a tweet calling for gas station owners to lower the price of gasoline:
“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.”
If “big oil” is President Biden’s target, he missed the mark. According to the National Association of Convenience Stores, the vast majority of gasoline stations are owned and managed by independent retailers who license to operate under a major brand name. Over 60 percent of these retail stations are run by an owner who owns a single store. Furthermore, gas station owners make very little profit on gasoline sales – most profits are generated by sales of food and drink.
Who’s next – the consumer? The prospect of household energy rationing in Europe is a warning sign of the kind of policies that follow when governments deprioritize energy security.
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