WASHINGTON (AP) — With the continued threat of Russia’s invasion of Ukraine, a foreign policy crisis comes up against one of President Joe Biden’s political vulnerabilities: rising gasoline prices in the country. .
Americans are already appalled by inflation at a 40-year high, and Biden warns gas prices could rise if Russian President Vladimir Putin chooses to invade. It’s an acknowledgment of Biden’s own risks ahead of the 2022 midterm elections: Inflation has become an albatross for Democrats.
“We stand ready to deploy all the tools and authority at our disposal to bring relief to the gas pump,” the US president said on Tuesday. “We are taking active steps to ease pressure on our own energy markets and offset rising prices.”
The price of crude oil – and gasoline – began to climb over the past month as Putin massed forces on the Ukrainian border. The diplomatic back and forth has rocked financial and commodity markets as investors try to assess what armed conflict and US sanctions on Russia would mean for the global economy.
Even though the entire US economy can absorb higher energy prices, American families have experienced steep increases in the price of food, energy and other goods. Forecasts from JPMorgan and other investment firms suggest that crude oil – already at around $95 a barrel – could rise above $125 a barrel on tight supplies, which an invasion would intensify.
Biden wants to emphasize how the situation in Ukraine is contributing to higher gas prices, but costs at the pump were already significantly higher than a year ago. Efforts to coax oil production in the United States and abroad have largely failed.
Republicans certainly won’t give Biden a pass due to tensions overseas. Senate Republican Leader Mitch McConnell criticizes the president for rising energy and food prices, saying “the Biden administration seems less interested in trying to solve this problem than in trying to persuade families that the pain is just in their head”.
In a December AP-NORC Center for Public Affairs Research poll, most Americans — 85% — said they had experienced higher than usual prices for groceries and gasoline in recent months. And in an open-ended question about the main issues the government needs to work on, 10% named gas prices and energy costs as a sign of the political challenge Biden faces.
“Given the world we find ourselves in, any increase in commodity prices, even if it is transitory, even if the Federal Reserve generally tries to look beyond the obvious supply shocks when making its decisions, it adds to the political conundrum,” said Gerard DiPippo, senior fellow at the Center for Strategic and International Studies. “It puts the White House in a bind.”
White House press secretary Jen Psaki said Wednesday that National Security Council Middle East coordinator Brett McGurk and State Department energy envoy Amos Hochstein were in Riyadh on Wednesday to meet with Saudi officials. She would not say if they were pressing the Saudis to pump more oil to help stabilize the global oil market.
Biden did not say on Tuesday what additional steps his administration would take to reduce oil prices if the situation in Ukraine worsens. In late November, he ordered the release of a record 50 million barrels of oil from the US strategic reserve to reduce price pressures.
Gasoline prices fell in the weeks after the oil exit, though prices have since eclipsed levels when Biden announced the withdrawal. He could order another release if diplomacy fails to get the Russians to back down.
Members of Congress are looking for other ways to ease the pain.
Democratic senses Mark Kelly of Arizona and Maggie Hassan of New Hampshire — both up for re-election — are already calling for a federal gas tax break. The White House has not yet approved or ruled out this option.
“What people are focusing on is what we can do immediately,” said Michigan Sen. Debbie Stabenow, a Democrat. “People need relief right now, so this is a short-term way to do that.”
Gas prices are up nearly 40% from a year ago and more than 6% over the past month, according to AAA. The suspension of the federal tax of 18.4 cents per gallon would not compensate for the price increases that occurred recently when Russia threatened Ukraine. And there is no guarantee that energy companies will pass all the savings on to consumers.
It’s also unclear whether there’s enough support in the Senate for a gas tax holiday to go ahead. Republican Senator Lisa Murkowski of Alaska likened it to a one-time “sugar high” that could wear off quickly.
“I don’t think that’s the solution here,” Murkowski said. “That doesn’t solve the problem for people paying high prices at the pump. It’s a ‘we’re going to stop you thinking about it by giving you a little compensation here.’ “”
Adjusted for general inflation, gasoline prices are not necessarily so high. Average prices were generally higher from 2011 to 2014 during Barack Obama’s presidency and during George W. Bush’s second term, according to the Energy Information Administration.
Jason Furman, a former Obama aide, economist at Harvard University and senior fellow at the Peterson Institute for International Economics, said the US economy is at a point where it can withstand rising oil prices, even if pockets of the country could be affected. High prices would actually lead to more oil-related investments, which could eventually cause prices to fall.
Furman said the best choice Biden could make is what he did on Tuesday, warning the American people that prices could rise in the event of war.
“There’s just not much the president can do,” Furman said. “A certain part of what the president should be doing is telling people that these events can push prices up temporarily and prices will also come back down.”
Associated Press writer Kevin Freking contributed to this report.