Claim: Many Vietnamese Americans believe that President Joe Biden is to blame for the rise in gas prices, saying that during the Trump Administration, gas prices were cheaper.
Rating: This claim is MOSTLY FALSE. The American president does not control gas prices. Gas prices are determined by the price of oil on the global market. Because Russia has waged war on Ukraine, the U.S. and its European allies have reduced their import of Russian oil. This has led to a worldwide increase in the price of oil and thus, a worldwide increase in gas prices.
Why was gas so much cheaper during the Trump administration?
The reason that gas prices were cheaper during the Trump Administration was because of the COVID-19 pandemic. When stay-at-home orders were put in place, there was a lower demand globally for oil as people stopped driving and flying on airplanes. This led to an oversupply of oil, which led to a decrease in oil prices and a decrease in gas prices, according to the U.S. Bureau of Labor Statistics.
Prices for oil were even going negative as unused oil was taking up space in storage facilities. The low oil prices compelled many oil producers to cut back or cancel oil projects entirely as the oil industry faced a bankruptcy crisis.
Why is gas so expensive now?
The president of the United States does not control the price of oil and gas.
Oil is bought and sold by countries at global auctions, so it is the global supply and demand of oil that ultimately determines pricing. What affects the price of gasoline is the global cost of a barrel of crude oil (the oil that comes straight out of the ground). Gasoline is created from oil that has been refined.
The global oil markets are complex. It is not only changes to global oil supply, but nervousness about the effect of world events on energy supply that can have a huge effect on the price of oil.
After Russia began invading Ukraine, oil prices and gas prices increased dramatically around the world. Even though only 5% to 10% of oil in the U.S. is imported from Russia, gas prices in the U.S. rose as well. Russia is one of the largest global suppliers of oil, supplying oil primarily to Europe and Asia. After Russia waged war in Ukraine, the Biden Administration persuaded its allies in Europe to place economic sanctions on Russia, including on its oil.
These sanctions on Russian oil means that there is now a drop in the global oil supply, as countries, including the U.S., are decreasing their imports of Russian oil. A lower supply means an increase in prices. It is not just Americans that have experienced an increase in gas prices. Gas prices have also risen in Europe, showing that the rise in gas prices is outside of Biden’s control.
Why can’t the U.S. increase its oil production?
Republican Senator Mitch McConnell has blamed Biden for gas prices, saying that gas prices would not be so high if the Biden Administration had done more to promote domestic sources of oil production.
This claim is also FALSE. Dramatic expansion of oil production in the US occurred under the Obama Administration, which saw the US more than double oil output from 2008 to 2019, with the bulk of that increase happening from 2008 to 2016.
In 2021, the Biden Administration leased out 80 million acres of oil rights in the Gulf of Mexico for additional U.S. oil production. While a federal judge paused this process, increasing oil production is an expensive process that can take years to have an effect on gas prices.
Also, investors in U.S. oil companies, who lost billions on oil projects during the COVID-19 pandemic, are now pressuring those companies to take advantage of the profits generated from high oil prices. Those investors are also discouraging companies from increasing oil production, which is now seen as high risk because the world is investing more in renewable sources of energy.
Before the war in Ukraine, in late 2021, U.S. Energy Secretary Jennifer Granholm asked U.S. oil producers to increase their oil output, as consumers were increasing their spending and fuel use. The government can ask that American energy companies produce more oil but they cannot mandate that these companies, which are private companies, produce more oil.
After the Russian invasion of Ukraine on Feb. 24, 2022, oil prices increased to an all time high, only to drop almost to pre-invasion levels a week later, despite additional sanctions on Russian oil.
The Biden Administration has limited control over the price of oil and global oil supply. It is worldwide supply-and-demand, predictions from investors on the future of oil, as well as the business goals of oil companies, that determines gas and oil prices.