Democrats’ Favorite Inflation Talking Point Debunked by Fed Economists
Democrats attempting to steer blame away from their policies as voters become increasingly frustrated by inflation were served bad news by economists at the Dallas Fed, who argued that “price gouging” by greedy oil companies was not the reason for skyrocketing gas prices.
From The Daily Caller:
“Gas station operators set retail prices based on their expected acquisition cost for the next delivery of fuel from the local distributor, federal and state tax rates, and a markup that covers operating expenses, such as rent, delivery charges and credit card fees,” the Fed officials wrote.
“Since only 1 percent of service stations in the U.S. are owned by companies that also produce oil, U.S. oil producers are in no position to control retail gasoline prices,” they continued.
That assessment stands in stark contrast to Democrats, who have pinned the blame on oil companies and Russia’s invasion of Ukraine for high gas prices.
Democratic Reps. Kim Schrier and Katie Porter even introduced the Consumer Fuel Price Gouging Prevention Act in the House last week, which House Speaker Nancy Pelosi said will receive a vote on the floor while disparaging oil companies for hauling in “record profits” as Americans “are struggling to pay higher prices at the pump.”
But the economists are not convinced oil companies are to blame for the pain at the pump:
“The elevated retail gasoline prices must be attributed to events in the U.S. retail gasoline market beyond the control of oil producers,” they continued. “Moreover, the asymmetry of the response of retail gasoline prices need not be evidence of price gouging.”
While other members of his party have been busy blaming oil companies for high prices, President Biden has seemingly gone all-in on blaming Russia’s invasion of Ukraine, referring to the skyrocketing prices as the “Putin price hike.”
But while Russia’s war in Ukraine has become another factor in rising prices, an analysis by Marc Thiessen from the American Enterprise institute noted that gas prices were rising sharply well before Russian troops crossed Ukraine’s border.
Thiessen noted that gas prices averaged $2.46 the day before Biden took office, from which point the president oversaw “the largest year-over-year price rise in at least 30 years.”
That increase took place well before Russia’s invasion of Ukraine, with Thiessen pinning the blame squarely on the president himself.
What drove those record price spikes?” Thiessen wrote. “We can start with Biden’s war on fossil fuels. Upon taking office, Biden implemented a policy of energy disarmament. He rejoined the Paris climate agreement, canceled the Keystone XL pipeline, suspended all oil and gas leases in Alaska’s Arctic National Wildlife Refuge and began working on his pledge to ban all ‘new oil and gas permitting on public lands and waters.’
“He came into office having promised that his administration would end fossil fuel,” Thiessen continued. “When you announce your intention to tax and regulate the fossil fuel industry out of existence, investors and workers listen. The results are less production — and higher prices.”