Biden aides have also in recent days considered invoking the Defense Production Act to displace diesel and other refined products in the event of a localized shortage, two people familiar with the matter said. Diesel prices have risen significantly, posing a major threat to the country’s trucking and shipping industries, although experts say shortages appear to remain unlikely for now.
The rekindled brainstorm reflects how rising fuel costs have become one of the Biden administration’s top policy threats and a serious impediment to the economy as a whole. The White House has taken a number of steps to try to address the issue, such as committing to a historic release of the country’s oil reserves and, on Wednesday, sending a letter to the country’s refineries calling for more production and criticizing their profits. President Biden has also tried to increase production internationally, pushing the world’s oil producers and coordinating the release of domestic reserves with US allies.
But these measures do not seem to have helped much. The national average gasoline price topped $5 a gallon for the first time this weekend, an increase of about 11% from last month, according to AAA. (The average fell ever so slightly on Thursday and Friday, but remains at $5.) Polls suggest widespread frustration with rising prices, raising the likelihood that voters will punish Democrats this fall and hand Republicans control of at least one chamber of Congress next year.
White House officials have rushed in recent days to review all potential federal policy responses again. Officials also discussed telling governors to reduce or waive their gasoline taxes, another person familiar with the administration’s internal discussions said.
States consider gas tax break as fuel prices soar
The people, who spoke on condition of anonymity to discuss private discussions, stressed that these measures were being explored on a preliminary basis and that no final decision had been made.
Attempts to explore off-the-shelf solutions to high energy prices reflect the paucity of solutions available to government, as well as the magnitude of the challenge they pose. White House spokespeople said all options were on the table, but a White House official said the refund proposal – pushed by some Democrats in Congress – was unlikely to move forward. due to logistical difficulties. Critics also say the idea could backfire by driving up prices further by increasing consumer demand.
Other proposals put forward by political pundits include suspending the Jones Act, which would cut shipping costs and make it cheaper to get gasoline from the Gulf Coast to the East Coast, imposing price controls and banning US energy exports. But all of these ideas have their own political and practical drawbacks, with the Jones Act backed by influential labor groups and economists warning that any supply restrictions could make the problem worse. One person said the White House had also looked at limits on fuel exports, an idea first reported Thursday by Bloomberg News.
“Not only is there no existing solution, no one thinks there will be a compelling solution,” said an outside White House economic adviser. “They fight for the narrative rather than the substance, because concretely, what are they going to do?”
Inside Biden’s frustration over soaring prices
Biden on Wednesday defended his administration’s record, saying it was doing everything possible to cut costs for families — including at the pumps — in the face of immense headwinds.
“I’m doing everything in my power to mitigate Putin’s gas price hike,” Biden said, referring to Russian President Vladimir Putin. “We will work to bring down the prices of gasoline and food. We can save families money and other items. »
The gas price spike has many factors, but it was intensified by Russia’s invasion of Ukraine and subsequent Western sanctions against the Kremlin, which cut off supplies to what was the third world oil producer. Russian production has fallen by more than a million barrels a day due to export sanctions that make sales difficult and import sanctions that hurt production, according to Rory Johnston, an analyst at Commodity Context. Refineries needed to turn oil into gas and other products are stretched to their limits, with Russian refineries shut down and US refining capacity down about 5%, according to the Energy Information Administration.