Gas prices rise after invasion of Ukraine, but Biden’s not to blame

March 28, 2022 3:33 am

A man refuels at a gas station in Fayetteville, North Carolina. (Sean Rayford/Getty Images)

The Kansas Reflector welcomes opinion pieces from writers who share our goal of widening the conversation about how public policies affect the day-to-day lives of people throughout our state. Allie Utley serves as the first vice president of the Kansas Young Democrats.

This month, the United States beat a 2008 record for the average price of gasoline, followed by President Biden’s stern blockade of Russian oil being imported across American borders in response to Moscow’s invasion of Ukraine.

Since then, gasoline prices have spiked, and politicians are trying to make political hay.

Fact-checkers and political enthusiasts, like myself, have dealt with this faux issue for decades. Gas prices were debated back in 1996 when Kansas’s own (then) Sen. Bob Dole campaigned for president and urged a repeal of the 4.3 cent gasoline tax because the pumps were on track to reach $1.31 a gallon.

It was all over the papers again in the early 2000s, when gas prices appeared to have risen to the highest level ever. Journalists leaped on the subject in 2012, when partisan politicians complained that gasoline prices had doubled in President Obama’s term.

Even in 2022, the political theater hasn’t changed. It’s evolved into fallacious Twitter posts and “I did that!” Joe Biden gas pump stickers.

The first thing that should be understood about gasoline is what it’s made from. Unrefined petroleum, more commonly known as crude oil, is a yellowish-black liquid found in geological formations beneath the Earth’s surface and is the raw commodity used to make gasoline. Crude oil is used to make all petroleum-derived products, including gasoline, diesel fuel, jet fuel, asphalt and paraffin wax, among dozens of other products.

According to the Energy Information Administration, the price of crude oil accounted for 56% of the total price of gasoline in the decade through 2020, on average. (For reference, from 2011 to 2020, the remaining 16% went to federal and state taxes, 14% went into distribution and marketing, and 14% went into refined costs and profits). Due to the percentage of crude oil accounting for more than half the price of gasoline, the key to understanding high gas prices is understanding crude prices.

Seven main factors affect the production and sales of this mineral: spot prices, supply from non OPEC (Organization of the Petroleum Exporting Countries) countries, supply from OPEC, balance, financial markets, demand from non-OECD (Organization for Economic Co-operation and Development) counties, and demand from OECD.

No magic wand or a single piece of legislation makes these prices go down or these factors easier to solve. Instead, there are only these factors and the domestic and foreign CEOs looking to pad their profits.

– Allie Utley

No magic wand or a single piece of legislation makes these prices go down or these factors easier to solve. Instead, there are only these factors and the domestic and foreign CEOs looking to pad their profits.

Spot prices affect crude oil (along with any petroleum product) simply by events that have the potential to disrupt the flow of oil to market, including geopolitical and weather-related developments. These types of events may lead to actual disruptions or create uncertainty about future supply or demand, which can lead to higher volatility in prices. 

While we’re on the subject, guess which country holds the No. 3 spot in the world’s top 10 oil exporters?

You guessed it: Russia, which accounted for 10.53% of global exports, totaling about $115 billion in 2019. With the ban of the world’s third-largest exporter, the global supply will ultimately decline and most likely make the global price increase.

Oil companies around the world have uncharacteristically become virtuous, in the sense that they’ve completely divested from all Russian oil assets. BP, Equinor and Shell have announced they are “self sanctioning,” by cutting their ties to the Russian oil industry — a move that will cost them, and American pocketbooks, billions of dollars.

But this isn’t the first time worldly events have caused gas prices to increase and decrease.

Many of us can refer back to the events following the Sept. 11 attacks during the George W. Bush administration, when the price of crude oil hit $145 per barrel. This also happened as recently as under the Obama administration when the demand recovered after the 2008 financial crash, ensuing Great Recession.

Indeed, gas prices have fluctuated within and across administrations, with little correlation to which president or party is in power. As with most things, the price of gasoline is determined not by the president, but rather by the state of the economy, the world, and the balance of supply and demand.

It’s worth noting that the United States, along with several other countries, maintains strategic reserves of oil. The U.S. Strategic Petroleum Reserve, which is maintained by the Department of Energy, holds almost 700 million barrels of oil that can be drawn upon by order of the president in the event of a supply disruption that meets specific statutory criteria. President Biden plans to release 30 million of those withheld barrels.

Ultimately, If you have an issue with the amount of money you’re paying at the pump, your problem isn’t with Joe Biden. A coronavirus pandemic and disruptions to global supply and demand, along with a war involving the world’s third-largest oil exporter, is like “pouring gasoline on general inflationary pressure,” said Abhiram Rajendran, the head of oil market research at Energy Intelligence.

All this is to say, are Americans ready to sacrifice for a greater cause? I’ll note the recent words of Ukraine’s President Volodymyr Zelenskyy:

“We are not far from you. And that’s why Americans, if you see and if you understand how we feel, how we fight against all the enemies for our freedom, support us. Support us and not only with words, with concrete direct steps”

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Allie Utley
Allie Utley

Allie Utley serves as the first vice president of the Kansas Young Democrats. She is a rural organizing professional from Allen County, Kansas.