Biden, Putin or Big Oil: Who is to blame for high gas prices?

(NewsNation) — The vast majority of Americans blame Russian President Vladimir Putin for skyrocketing gas prices, a new ABC poll found this week, but nearly as many also blame oil companies.

Despite the overwhelming majority of respondents pointing the finger at Putin and Big Oil, there was plenty of blame to go around, with a slim majority saying Democratic policies and President Joe Biden were also causing factors in pain at the pump. Similarly split views were seen in a recent NewsNation poll.

Gas prices have become a hotly debated partisan issue in Washington, D.C.:

• Biden and his party blame the ongoing war in Eastern Europe and a resulting ban on Russian oil imports. The Democrats also blame oil companies who they accuse of prioritizing profits over the well-being of the American people.
• Republicans point out that oil prices were on the rise even before the Russian invasion of Ukraine and instead blame the president’s energy policies, arguing they have hindered the oil companies from being able to ramp up production and drive down prices.

“I think both sides are vastly overstating their positions,” said Patrick De Haan, lead petroleum analyst at GasBuddy.

So who, or what, is really responsible for the increase in gas prices?

The war?

Last month, Biden accused Putin of “hitting Americans at the pump” and warned that gas prices could continue to rise as the war in Ukraine continues. In part, that’s because the U.S. has banned oil imports from Russia in an attempt to hit Putin’s most lucrative industry.

Prior to the ban, only about 8% of U.S. petroleum products came from Russia; the biggest importer of such products is Canada.

Although gas prices had been rising before the war, De Haan says it has contributed to rising prices but it’s hard to know exactly how much when compared to other factors including COVID-related labor and supply chain issues.

“Part of the reason we went so high is because of the unpredictable war on Ukraine and any further escalation that’s unexpected could cause oil prices to flare back up,” De Haan said.

Last month, Biden ordered the release of 1 million barrels of oil per day from the nation’s strategic petroleum reserve. It’s a move De Haan says will have a positive impact on prices, though not as significantly as factors that are pushing oil prices up like surging consumer demand.

As of Monday, the average price for a gallon of regular gas was $4.11, down from $4.33 a month ago, according to auto club AAA.

Oil companies?

Congressional Democrats have been quick to point the finger at large oil companies, accusing them of “ripping off the American people” and intentionally keeping oil production low in order to maximize profits.

“At a time of record profits, Big Oil is refusing to increase production to provide the American people some much-needed relief at the gas pump,” Rep. Frank Pallone, D-N.J., said at a congressional hearing with oil executives last week.

Despite House Democrats’ claims, industry experts point out that domestic oil production has ramped up in recent months. In September 2021, the U.S. produced about 10.4 million barrels of oil a day, far below the 11.8 million barrels that have been produced each day this month.

De Haan expects the uptick in oil production to continue as long as companies can overcome pandemic-related setbacks that have also affected other industries.

“The headwinds are very similar across the economy that are affecting the oil and gas sector, as well — things like labor, steel, drilling rigs, all of this is in very short supply,” De Haan said. “As some of these kinks get smoothed out, I do expect U.S. oil production to continue going up.”

De Haan also pointed out the boom-bust nature of the oil industry and said current criticism does not take into account the recent, extremely volatile, history.

“This oil sector was also the sector that was losing tens of billions of dollars early on in the pandemic and nobody was complaining about that then. So it’s not really fair to blame oil companies for selling at the market price today when we didn’t complain about oil companies selling at the market price in 2020 and 2021,” he said.

Biden?

On the other side of the aisle, Republicans are citing the cancellation of the Keystone XL oil pipeline and a moratorium on new drilling leases on federal lands as the cause of the problem. They argue that Biden’s energy policies have led to lower oil production, which has reduced the overall supply and caused higher prices.

But while it’s true domestic oil production is lower today than it was right before the pandemic, it’s unclear how much can be attributed to Biden’s policies. The president’s drilling moratorium was struck down by a federal judge last June.

So then, what’s the cause?

Instead, De Haan says long-tail effects from the COVID pandemic are more likely to blame.

“President Trump is not responsible for COVID and President Biden is not responsible for the continued imbalances that are persistent from COVID,” he said.

In February 2020, U.S. oil production hit a record-high 13 million barrels a day before plummeting to 10.5 million barrels a day in August 2020 — a direct response to the pandemic.

Americans stopped driving, airlines stopped flying and the demand for oil all but disappeared. At one point in April 2020, oil became effectively worthless as the price for a barrel of West Texas crude dropped below $0.

Oil companies responded by producing less.

Now, demand has returned but production has not been able to keep pace, yet.

In recent months, domestic oil production has ramped up to 11.7 million barrels a day but for the same reasons many industries have been slow to bounce back, overall production remains off record highs.

“This won’t be permanent. I think as things continue to normalize, as supply chains reopen, we will see an increase in U.S. oil production. For that I have no doubt,” De Haan said.