The White House has a problem that rules them all: gas prices


The White House’s focus on gasoline prices grew out of two sobering policy findings from top officials. The first is that they have little control over the problem. The second is that as prices rise at the pump, the Democrats’ chances of being wiped out mid-term also rise, especially as the average US gallon of gasoline hits new highs.

“There really is no magic bullet,” said one person familiar with the discussions. “It’s really hard to get a message across when you can’t deny the reality.”

In a frantic effort to try to slow gasoline prices that have risen by a dollar a gallon in the past three months alone, Biden aides have internally debated a host of ideas. Led by the National Economic Council, the intergovernmental team made up of aides from Cabinet agencies such as the Department of Energy, State Department and Treasury weighed approval of a federal tax holiday on gasoline, restricting oil exports, relaxing certain environmental rules or relying on the oil industry to restart closed refineries.

People familiar with the deliberations say they’ve been hooked, in part, because each option comes with complicated trade-offs and downsides that could prove politically painful and not guarantee lower gas prices.

The White House, for example, delayed backing a gas tax waiver for months, amid divisions within the Democratic Party and skepticism, a rebate of about 18.4 cents per gallon would be passed on to consumers. Top aides are under increasing pressure from frontline members to embrace the idea, but Biden was also vice president when Barack Obama derided a gas tax holiday as pure political gimmick .

Another option put forward by some congressional Democrats – banning oil exports – would antagonize the industry and risk backfiring by inflating global oil prices that determine gas prices at the pump. A proposed waiver of some smog rules would similarly trigger a backlash from climate groups.

In the absence of government action, Biden officials pushed for private industry to help. But they have so far struggled to convince national oil companies to quickly fill the void.

Adding to the dilemma, the administration already turned to its greatest tool in March: a record release of oil from the National Strategic Reserve. Officials had hoped the extra million barrels a day would ease supply tensions created by Russia’s invasion of Ukraine and subsequent sanctions imposed on the world’s third-largest producer. But the supply offered only temporary relief, with prices resuming their upward march within weeks.

“What they have is a whole bunch of 10-cent policies,” said Claudia Sahm, a former Federal Reserve economist and member of the Obama administration’s Council of Economic Advisers. “There is a kind of defeatism.

The predicament has upset administration officials who are already battling rising costs on a number of other fronts, with inflation at a 40-year high and polls showing voters embittered by the Biden’s handling of the economy.

Publicly, the White House has continued to blame Russia for record gas prices, trying for months to label the increase “Putin’s price hike” in hopes of convincing people that the issue is largely off the table. from the hands of Biden. But with the war showing no signs of abating, some Democrats are privately complaining that the message is ineffective — and that the White House needs to put on a bigger show to at least try to fix the problem.

For its part, the administration has recently sought to highlight steps it has already taken to rein in prices, including sending Energy Secretary Jennifer Granholm to Louisiana last week to visit one of the sites. of the Strategic Petroleum Reserve which holds the country’s emergency petroleum stockpile. The Environmental Protection Agency is allowing more ethanol into the fuel supply in a bid to ease the price crisis, and more recently officials have started preparing for the possibility that they will need tap into emergency reserves to counter soaring diesel prices in the northeast.

Yet even Granholm, on his tour, admitted that the government had a limited arsenal, tell CNN that “the president does not control the price”.

A White House official echoed that view, saying the administration was doing everything it could within its means.

“We will take all possible measures that will make a significant difference,” the official said. “While understanding and dealing with the reality that global oil prices and gas prices are controlled by forces much larger than anyone else.”

Biden allies inside and outside the administration are also growing frustrated with the oil industry, at times suggesting the companies should take more blame for their reluctance to dramatically increase production.

Major oil companies have posted windfall profits so far this year as the war in Ukraine has pushed up global energy prices. But companies have so far taken only measured steps to increase production for fear of being caught with excess oil when global supply pressures ease.

In private meetings with senior Energy Department officials to discuss ideas for increasing supply and lowering prices, some industry representatives instead used the sessions to push for longer-term priorities. such as the construction of pipelines and the easing of environmental restrictions.

The White House is unlikely to take such industry-friendly steps, especially after promising to make climate change a top priority. But, in a sign that the pain at the pump is affecting government policies elsewhere, officials have also resisted pressure from climate advocates to use high prices as justification to push for further acceleration away from fossil fuels.

Those constraints have left the administration with few attractive policy options, except to hope that Biden’s earlier decision to release oil reserves will begin to bear fruit more visibly closer to November, especially as domestic companies pump more of their own supply.

But the summer driving season is just getting started, U.S. demand is high and if prices continue to rise, others say Biden may soon be forced to choose the best from a bad set of options.

“There’s probably nothing that’s going to bring gas back close to $3 a gallon,” Sahm said. “But doing something is better than doing nothing, because at least the president can say I’m trying.”

Jonathan Lemire contributed to this report.


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