President Joe Biden is frustrated that massive drops in the price of crude oil are not quickly translating to lower gas prices for Americans.
Oil prices peaked around $140 per barrel after Russia first invaded Ukraine but had fallen back below $100 per barrel as of Wednesday. Still, national average gas prices have only fallen by 3 cents across that same window.
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BIDEN LED FROM THE REAR ON RUSSIAN OIL BAN
The president tweeted Wednesday morning that as “oil prices are decreasing, gas prices should too.”
“Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31,” he continued. “Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.”
https://twitter.com/POTUS/status/1504073842871963653Despite Biden’s claims, the slow retreat in domestic gas prices illustrates an economic relationship colloquially known as “rockets and feathers” and is backed up by decades of data. Consumer gas prices will rise in conjunction with a jump in oil prices, yet they’ll decrease at a much slower rate than that of oil, especially if prices were relatively stagnant before the spikes.
“This has been going on for 40 years,” Andy Lipow, president of consulting firm Lipow Oil Associates, told CNN. “Prices do dip, it just seems to take a long time. You can’t deny the data that is out there.”
“There would be some lag,” he continued. “What if I was the guy who just bought my tanker load yesterday and the next two days crude oil dropped?”
Still, top White House officials echoed Biden’s concerns regarding gas prices on Wednesday.
“‘Rockets up, feathers down’ is not a law of nature or physics when it comes to gas prices,” White House chief of staff Ron Klain tweeted. “Putin’s aggression may drive up the price of oil again in the future. But when that price is down — as it is now — gas prices should reflect that.”
https://twitter.com/WHCOS/status/1504080022717571075White House press secretary Jen Psaki claimed during Wednesday’s press briefing that while “many accept that gas prices rise quickly but fall slowly, the so-called rockets and feathers phenomenon,” Biden believes “that Americans deserve relief and fast as oil prices fall.”
“Retail gasoline prices are updated at least daily, and if gas retailers’ costs are going down, they need to immediately pass those savings on to consumers,” she continued. “The invasion of Ukraine and the volatility of the oil market is no excuse for excessive price increases, profit padding, or any effort to exploit American consumers. No one should capitalize on Putin’s aggression by taking advantage of American families.”
One White House official told the Washington Examiner Biden understands how rockets and feathers have impacted gas prices in the past but that he is doing “everything he can” to decrease costs for American consumers.
“President Biden was clear with the American public that the effort to stop Russia’s atrocities in Ukraine would impact the entire nation, and he challenged oil and gas companies to do their part in easing the economic fallout on Americans,” that person added. “The president will always fight to cut costs for Americans, especially if it means asking companies that make millions and billions in profits to pass on savings to consumers.”
Biden had warned Americans for weeks that the heavy economic penalties the United States and its allies placed on Russia would lead to elevated energy costs at home, and his first round of sanctions did not target Russian oil and gas exports to protect the global supply.
Weeks later, after the U.S. moved forward with a ban on Russian energy imports, Biden challenged domestic energy companies to put American customers ahead of their investors.
“Let me say this to the oil and gas companies and to the finance firms that back them: We understand that Putin’s war against the people of Ukraine is causing prices to rise,” the president said after announcing the ban at the White House. “But it’s no excuse to exercise excessive price increases or padding profits or any kind of effort to exploit this situation or American consumers.”
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“Russia’s aggression is costing us all, and this is no time for profit-carrying or price-gouging,” he continued. “I want to be clear about what we will not tolerate, but I also want to acknowledge those firms and oil and gas industries that are pulling out of Russia and joining the other businesses that are leading by example.”
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