Diane Bartz and Steve Holland

WASHINGTON, (Reuters) – President Joe Biden took a strong stance against gasoline prices, inviting China and other countries to participate in a potential joint release of oil resources and intensifying an investigation into the pricing practices of major oil companies.

Experts say that while the efforts might have limited effect on gasoline prices, it would still be politically foolish to do nothing as prices for gas reached a seven year high.

According to the American Automobile Association, average retail gasoline prices in America are now $3.41 per gallon. This is up from $2.11 last year.

Americans are among the most prolific gasoline consumers in the world. This is due to large automobiles, driving long distances, and a lack of public transport.

Larry Sabato (political scientist, University of Virginia) said that Americans expect President Obama to take action on this issue. We need to hold a national discussion about supply-demand law.

Sabato stated, “Inflation cuts so much, and can actually destroy a presidency,” and cited Jimmy Carter and Gerald Ford who tried unsuccessfully for Americans to cut gasoline consumption when prices rose.

American sales of larger sport utility vehicles (and trucks) have increased in recent years. This suggests that gasoline prices will continue to be an issue.

U.S. HIGH U.S. GASOLINE CONSUMPTION DOES NOT LOWER

According to Global Petrol Price calculations, Americans consume more gasoline per capita than anyone else in the world, at almost 1.2 gallons (5.9 litres per day). This is 10 times as much as the consumption of many European and Chinese countries. Those figures do not include diesel fuel. Neven Valev (an economist for the research group) estimates that adding diesel to European fuel consumption would result in a 20% increase in European fuel consumption.

Global gasoline consumption, per capita https://graphics.reuters.com/GLOBAL-OIL/zdvxonwwzpx/chart.png The United States lags Europe and other parts of the world in fuel efficiency, because of an American preference for SUVs and trucks that is only increasing.

U.S. lags in fuel efficiency: Here’s one big reason why https://graphics.reuters.com/USA-BIDEN/gdpzydenyvw/chart.png

PAIN IN THE POLLS

Biden’s recent approval ratings have fallen to their lowest point in a year according to Reuters/Ipsos surveying. Only 44% of Americans approve of Biden’s job performance. In November 2022, Biden’s Democrats are up for midterm elections. They will be trying to retain their small congressional majority.

The poll shows that the top concern of Americans is still the economy. It has been this way for eleven weeks.

Stock markets have reached record heights, the manufacturing sector is booming and unemployment has almost returned to pre-pandemic levels. However, consumer prices rose in October for the first time in 31 years due to high gasoline prices.

U.S. retail gasoline prices https://graphics.reuters.com/GLOBAL-OIL/zgpomkedmpd/chart.png

Crude oil costs more than twice as much as a regular gallon of gasoline. There are also taxes that add around 15%. The Organization of the Petroleum Exporting Countries has still 3.8 million barrels of crude oil per day due to supply shortages last year and has yet to return the market.

The U.S. Presidents have been struggling with increasing gasoline prices since 1973-1974 when the OPEC oil embargo was implemented. Often, they are unable to control the causes of the crisis at home.

Richard Nixon was president during the world’s first oil shock – a dramatic increase in pump prices in 1973 when OPEC nations decided to punish the United States and other countries for supporting Israel during the Yom Kippur War.

“It had a devastating effect on Nixon’s overall standing, which was already weakened by Watergate,” said presidential historian Thomas Alan Schwartz. He attempted to unite the nation in support of energy independence. That didn’t work.”

The Republican was facing inflation at 12.3% when Ford became president after Nixon resigned.

His “Whip Inflation Now,” campaign featuring WIN buttons, T-shirts and coffee cups, urged Americans to fight high fuel prices by carpooling and turning down thermostats. This was a political catastrophe and he lost it to Carter in 1976.

Carter tried to convince Americans to get out of OPEC by encouraging conservation. After a second oil shock, in which Iranian revolution occurred and production dropped, Carter faced increasing prices and lines at gas stations. His bid to re-elect Ronald Reagan failed.

The second term of Republican George W. Bush saw oil prices rise to $140 per barrel, and pump prices jump to $4 per gallon. After the Great Recession, Bush’s approval ratings plummeted from 25% to 25%.

PRISE ON BIG COMPANIES

In addition to increasing pressure on large gasoline refiners by increasing their size, the White House also asked the Federal Trade Commission for an investigation into possible anticompetitive behavior. This is something that other countries have attempted.

William Kovacic, former Chairman of FTC said that “there is a long tradition that suggests that these are often used political gestures.” These inquiries are futile.

Bush’s Democratic successor Barack Obama called for the Federal Trade Commission (FTC) to examine gasoline price increases that were caused by Hurricane Katrina or Rita in 2005, and economic recovery after the 2007-2009 recession.

Jack Ablin wrote last week that Biden may have some truth to his claims. He is the chief investment officer of Cresset Investments, an investment company. “Gasoline costs are 34cs higher than the prices can explain.”