High gas prices: the new headache for Biden and Democrats
The November midterm elections are still more than seven months away but high gas prices, coupled with the war in Ukraine, are already setting the stage for bitterly contested political campaigns across the country.
Political analysts say its the current scenario appears to benefit Republicans hopes of retaking control of Congress, possibly both the House of Representatives and the Senate, making President Joe Biden’s last two years of his term extremely uncomfortable.
“It’s not good for the administration,” said Frank Maizano, a strategic communications expert at the Washington law firm Bracewell which specializes in energy. “Don’t kid yourself, the Republicans are going to play politics with this because of the tightness of the political season,” he added.
Add to that the fact that midterm elections tend to go badly for the incumbent in the White House as voter turnout drops when the president is not on the ballot.
“It’s a matter of how much the Democrats can minimize the losses in November. The ship has sailed on whether they can win,” said Rick Sanchez, a former cable news anchorand founder of Agua Media, a Hispanic podcast network for English-speaking Hispanics.
The higher prices pre-date the invasion of Ukraine as demand for oil outpaced supply in the second half of 2021 as the country began to emerge from the covid lockdown, literally fueling an already painful rate of inflation.
Oil production dropped due to pandemic, now unable to meet demand
During the early stages of the pandemic oil prices fell sharply, to about $23 a barrel, and production plummeted because it was no longer as profitable. Now, with crude oil above $100 a barrel, there is more of an incentive to ramp up U.S. production, though it is still below the high reached in 2020 before the pandemic struck.
In February 2020, U.S. oil production reached 13.1 million barrels a day, but had fallen more than 10% — to 11.6 million barrels a day – by February this year.
Since then, inflation has only made Biden’s economic problems worse.
Some economists have argued that the March 2021 $1.9 trillion covid stimulus package helped spark the current rise in prices.
The White House has sought to blame the global oil market as it faces the greatest upheaval since the Middle East oil embargo of 1973-73 and the 1990-91 Persian Gulf war. “Democrats didn’t cause this problem, Vladimir Putin did,” Biden said last week.
The ruling party usually gets the blame
“The punchline on this is that Democrats have control of the White House, and Congress, so right now voters are going to be pointing the blame at whoever is in government,” said Matt Terrill, a former Republican Party strategist with communications firm Firehouse Strategies.
Biden’s dilemma is highlighted by the seemingly contradictory views of voters over gas prices and the war. A recent ABC News/Ipsos poll, showed 70% of Americans disapprove of Biden's handling of gas prices, though even more respondents -- 77% -- support Biden’s sanctions against Putin, including his ban on Russian oil.
“American care about foreign policy, but they care more about gas prices,” said Terrill. “Gas prices are hitting people in the pocket-book. That hits home,” said Terrill. “Besides, they see it every day as they drive by the gas stations and see the prices,” he said.
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Former U.S. ambassador Luis Moreno tweeted his bemusement. “Maybe it’s because I spent three decades overseas representing my country, but I never cease to be amazed at how insulated so many Americans are,” he wrote. “Inflation, high crude oil prices are global issues, not just American ones. Blaming it all on Joe Biden is shortsighted,” he added.
"The price of combatting tyranny is a period of high gas prices"
Some analysts say Biden has no choice but to stay the course and do the right thing for the country.
“Ultimately, if the price of combatting tyranny is a period of high gas prices, that’s a price we need to be prepared to pay as a country,” Larry Summers, former United States Secretary of the Treasury, told CNN in an interview with Fareed Zakaria.
While there is some association between higher gas prices and lower presidential approval, the connection is actually not as strong as might seem, according to Sabato's Crystal Ball, a bulletin by the University of Virginia's Center for Politics. It's also gotten weaker over the past decade than it was previously.
"Even as gas prices have spiked in the past couple of weeks in the aftermath of the Russian invasion of Ukraine, Biden’s approval rating has actually gone up slightly, as measured by the FiveThirtyEight and RealClearPolitics averages," the Crystal Ball pointed out.
In fact, the war could lessen the political damage for Democrats in November. “Putin’s invasion fiasco in Ukraine is helping Biden in a strange way,” said Sanchez. “Historically, in the United States, any time a president is able to take on the mantle in wartime, he is rewarded by voters,” he added.
If Biden is able to keep the country united over Ukraine, and if covid numbers keep going down, things may look less bleak for Democrats in November.
“People are going back to work. There are lots of jobs out there, and despite gas prices things are starting to get better,” said Sanchez.
Polls are not very encouraging for Democrats
For now, there is no sign of that. A recent Quinnipiac University Poll survey found that 27 percent of respondents see inflation as the country's most urgent issue, followed by 12 percent for immigration and 10 percent saying covid-19.
Among Hispanics, Biden is also losing popularity. Six out of 10 of those consulted in a recent Univision poll had a positive perception of the president’s job performance – a drop of 21 points in almost a year. Six out of ten said government policies have made the cost-of-living rise.
Despite that, more than half of the participants in the poll approved of Biden's work with respect to the economy, and only 27% strongly disapproved of his actions in this field.
Gasoline prices likely to remain high for the rest of the year
Oil industry experts say the war in Ukraine and the U.S. and European sanctions on Russia will likely keep gas prices high. Fears that the price of oil could hit $180 a barrel when the war in Ukraine began were likely exaggerated, but it is still likely to settle somewhere between $80 to $100 a barrel, more than twice what it was a few months ago, said Maizano.
As people begin to put the covid pandemic behind them and get out and about more, plus the upcoming summer driving season, the demand for gasoline is only expected to increase, putting more pressure on prices at the pump. (Every $10 increase in the price of crude oil adds about 24 cents to the cost of each gallon.)
The U.S. oil and gas industry says it is optimistic about increasing production. “The United States is now the world’s leading producer of oil and natural gas and exporter of liquefied natural gas,” the president of the American Petroleum Institute, Mike Sommers, wrote to Energy Secretary Jennifer Granholm, earlier this week.
“In fact, for a period last month, U.S. liquified natural gas exports to Europe actually exceeded Russian pipeline deliveries—a remarkable feat that would have been impossible just a few short years ago. And our nation has the capacity to do even more,” he added.
Natural gas exports are set to grow an additional 20% beyond current levels by the end of this year as additional capacity comes online, according to the Energy Department.
Middle Eastern oil producers have shown little interest so far in increasing their output and Venezuela and Iran are both under sanctions. New production will be coming online next year from fields being developed in Canada, Brazil and Guyana, which will help hold down future prices.
While U.S. domestic production from the Texas shale oil fields is expected to pick up due to the higher prices, that will take months to kick in, rising back up to 13 million barrels a day in 2023.
“We are starting to see more production,” said Maizano. “By the fall maybe there will be more balancing of supply and demand, but I don’t think we’ll be at a point by then where the oil impact goes away,” he added.