11 min read

What can the president do about gas prices?

Answering reader questions on gas prices and the U.S. oil supply.
What can the president do about gas prices?
Good morning! It’s Wednesday, October 26, 2022. The 2022 election is 13 days away. The 2024 election is 741 days away.

From time to time, I like to set aside some space to answer questions from readers to make sure I’m addressing what you’re wondering about and explaining things you’re confused by.

This morning, I’m answering a few questions I’ve received lately about gas prices and the U.S. oil supply. That may not seem political on the surface — but, as the most visible sign of inflation, gas prices are a driving force in American politics. They’ve been shown to be correlated with President Biden’s approval rating and become a major talking point in the midterms.

Right now, gas prices on edging down nationally (although they remain high in the West), but they are still playing an important role in the political landscape. So I wanted to address the questions I’ve received; as always, I hope my answers manage to explain something confusing and help you understand an important part of our complex world.

Also in this morning’s newsletter: A look at a few more sleeper races, a recap of the Fetterman/Oz debate, and more.

🤔 Ask Gabe: Why is the U.S. so dependent on foreign oil? And can the president fix it?

Dane T. asks: “As of 2021, the U.S. was the top oil- and gas-producing country. Why is it that we are still so oil dependent on other countries?”
Marga M. asks: “I’ve read that the U.S. exports 18 million barrels of oil per day. If this is accurate, why are we exporting this oil when we need it for ourselves? It seems like a no-brainer to use this oil, instead of taking oil out of the Strategic Petroleum Reserves.”

First, let’s start with the facts. Both Dane and Marga are correct: the U.S. produces about 18.9 million barrels of oil per day, making it the top oil producer in the world, according to the Energy Information Administration. That’s about 20% of the global total; the next top producer, Saudi Arabia, is fairly far behind at 10.8 million barrels per day.

Why, then, do we need to import so much oil from other countries (as Dane asks) and why do we choose to export so much to other countries (as Marga asks)?

The simple answer here is that there are different types of oil and all of it must be refined before being used. “Almost no one consumes oil directly,” the American Petroleum Institute points out. “It must be refined into the fuels, feedstocks, materials, and products that we purchase and use in our daily lives.”

But different counties have different refinement capabilities, and their capabilities don’t always line up with the types of oil they’re producing, which is why there’s this ongoing flow of oil between producing countries.

Oil is classified by weight (heavy vs. light) and sulfur content (“sweet,” low on sulfur, vs “sour,” high on sulfur). While the U.S. overwhelmingly produces oil that’s light and sweet, most of our refineries are geared towards heavy and sour oil (which the Middle East and Russia predominantly produce), a vestige of when we were more reliant on foreign oil than we are today. (It’s also because most U.S. refineries were built before the emergence of fracking, which produces light-sweet oil.)

So even though we produce almost 19 million barrels of oil a day, it’s not the right type of oil, which is why we still need to export oil to be refined abroad and import oil to make use of our refineries here.

The real question, then, is why doesn’t the U.S. work on changing its refining capacity? Wouldn’t that make us more energy independent and less vulnerable to foreign decisions like the recent OPEC+ production cut?

Like many things, it really comes down to inertia and a cost-benefit calculation. Oil companies spent “billions of dollars on [their current] refining capacity” in the 1990s and early 2000s, notes Ryan Kellogg of the University of Chicago. They’ve made the decision that it makes more economic sense for them to import oil from abroad than to pour money into revamping their refineries.

An oil field in Kansas. (Unsplash)
Ellen R. asks: “Will the release of the next 15 billion barrels from the petroleum reserves keep gas prices stable? I realize the Biden administration knows that gas prices going up will hurt them in the midterms but what else can be done? Will this be enough?”

Probably not! The Strategic Petroleum Reserve, to quickly review, is a special supply of crude oil that the U.S. keeps in underground tanks in Louisiana and Texas in case of emergency.

President Biden has tapped into the SPR at record amounts; analysts say that’s helped bring down gas prices a bit, but not by all that much. Per EnergyWire, the SPR releases are estimated to have “knocked between 17 and 42 cents off the cost of a gallon of U.S. gasoline this year.”

“The impact of the SPR on gasoline prices tends to be modest,” Lutz Kilian, an economist at the Federal Reserve Bank of Dallas, told McClatchy News. “The SPR is not well suited for managing global oil price risks. That would take a much bigger reserve. [It is] at its best in dealing with short-run supply disruptions such as those caused by hurricanes or shipping accidents.”

After all, Americans consume almost 20 million barrels of oil per day; releasing 15 million more barrels can only do so much. (Plus, some of what is released from the SPR also ends up being exported overseas because of, you guessed it, refining capacity. The White House has so far mainly released oil that can be refined here, but with the SPR at its lowest level in decades, it soon will have mostly light-sweet oil left, the kind that — as you now know — largely is going to have to be exported.)

However, to answer Ellen’s other question, there isn’t much else a president can do to influence gas prices. Politico notes some options available to Biden to boost U.S. oil supply: easing sanctions on oil imports from Venezuela and Iran, boosting production, limiting export. But each of those steps comes with pitfalls: the first could have the appearance of incentivizing American adversaries, the second would upset climate activists in Biden’s base, the third would disrupt the global market and (as previously discussed) might not help much because of the whole refinery problem.

Faced with that less-than-ideal suite of options, Biden has instead tried leaning on oil companies to bring down prices, but so far the pressure campaign hasn’t yielded much; the president has little authority to force them to listen.

How might they come down, then? This CNN piece offers a daunting thought: A recession might just be the only thing that will bring down gas prices for good, since demand is driven down by fewer people working, shopping, going out to eat, or taking vacations.

Average gas prices in each state. (AAA)

😴 More sleeper races

Last week, I wrote about some top sleeper races” to watch this year. These are contests that will probably go as expected, but show some signs of building towards an upset on Election Night.

I asked readers to flag some sleeper races of their own — here are a few of the ones you sent in:

New York gubernatorial race (submitted by Mathieu M.)

This is a perfect example of a sleeper race. Polls have been all over the map: a Siena poll last week gave Gov. Kathy Hochul (D) an 11-point edge over Rep. Lee Zeldin (R), but then a Quinnipiac poll the same day showed Hochul only up four.

As Zeldin surges, Republicans are giddy at the sudden prospect that they could win New York’s governorship for the first time since 2002. Hochul has some unique vulnerabilities — she was never elected governor in the first place, only succeeding to the office after Andrew Cuomo’s resignation — but if Zeldin does well here, it will also be a sign of the strength of themes that the GOP has emphasized nationwide: crime and the economy.

A Zeldin victory, in one of the nation’s most populous states and a bastion of American liberalism, would be nothing short of a political earthquake.

North Carolina Senate race (submitted by Katrina V.)

I debated including North Carolina in my own list, but ultimately decided against it because it’s taking place in a traditional battleground state and felt more like a run-of-the-mill competitive race. However, I think you could classify it as a sleeper race almost purely because of how Democrats have treated it.

According to the polls, former state Supreme Court chief justice Cheri Beasley (D) is running neck-and-neck with Rep. Ted Budd (R) in this open race created by Republican Sen. Richard Burr’s retirement. The FiveThirtyEight polling average currently shows Budd with a slim 2.6-point lead in the race.

But you wouldn’t know it based on how Democrats have largely neglected to invest in the race. In a piece last week, Vox called Beasley the party’s “most underrated Senate candidate.” You almost can’t blame them: Democrats have been burned in North Carolina before, repeatedly coming up short in the state after polls told them they had a shot. But some Democrats worry that they’re leaving walking away from a winnable race; if the race ends up being close on Election Night, party strategists will be kicking themselves for not giving the state just a little bit more attention.

Washington’s 3rd congressional district (submitted by Jon B. and Caiten W. )

This is the district currently represented by Rep. Jaime Herrera Beutler, one of the ten Republicans to support Trump’s second impeachment. Trump quickly endorsed against her, and Herrera Beutler failed to advance to the general election.

That leaves the race between first-time candidates Joe Kent (R) and Marie Gluesenkamp Perez (D), and some polls have suggested the contest could be a close one. New York Times columnist Michelle Goldberg has called this “the midterm race that has it all,” a fight between the MAGA acolyte Kent and progressive Gluesenkamp Perez.

Colorado’s 3rd congressional district (submitted by Helen P. and Don K.)

Rep. Lauren Boebert (R) represents a district that is certainly Republican-leaning, but not by nearly as much as you might think from listening to her bombastically pro-Trump rhetoric. The district went 52-46 for Trump in 2020.

There has been little reliable polling in the race, but some surveys from lesser-known outifts have given Democrats hope that Adam Frisch (D) could be headed for an upset.

While we’re on the topic: In the days since WUTP ran our list of sleeper races, a long list of news outlets — including the Washington Post, CNN, NBC, Fox News, and The Hill — have run similar pieces. Some races highlighted by those outlets that are worth noting:

🚨 What else you should know

DEBATE NIGHT: Pennsylvania Senate candidates John Fetterman (D) and Mehmet Oz (R) met Tuesday night for perhaps the most highly anticipated debate of the 2022 cycle. By all accounts, Fetterman — who suffered a stroke in May — struggled throughout the night, frequently missing words and speaking haltingly.

  • Pressed at one point about his inconsistent position on fracking, Fetterman answered: “I do support fracking and I don’t, I don’t — I support fracking, and I stand, and I do support fracking.” One Democratic lawmaker wondered aloud to Axios, “Why the hell did Fetterman agree to this?”
  • Meanwhile, Democrats are skewering Oz for his answer on abortion, which he said should be left up to “a woman, her doctor, and local political leaders.”
  • Plus: Here, via Politico, are takeaways from the night’s other debates, from New York to Michigan to Colorado.
Fetterman and Oz on the debate stage Tuesday night. (Screengrab)

BATTLE FOR THE HOUSE: Sabato’s Crystal Ball, a leading election prognosticator, now rates 218 House seats — the number needed for winning a majority — as at least leaning Republican.

  • The new ratings come as Republicans are putting Democrats on defense in a growing number of blue-state seats, including in Oregon, New York, California, and Rhode Island.

ON THE HILL: Just 24 hours after releasing a letter calling on President Biden to pursue diplomatic efforts with Russia to end the war in Ukraine, the Congressional Progressive Caucus reversed itself and withdrew the missive on Tuesday. Rep. Pramila Jaypal (D-WA), the caucus chair, blamed the release on her staff; Politico, however, reports that she personally approved it.

  • The letter sparked a widespread backlash among Democrats for appearing to create a divide in the party’s stance on Ukraine. “People are furious,” one senior House Democrat told CNN.
Rep. Pramila Jayapal is at the center of an embarrassing episode for progressives. (Ronald Woan)

INVESTIGATIONS: Sen. Bob Menendez (D-NJ), who was indicted in 2015 for giving public favors to a wealthy donor, is being investigated again in a similar case involving a different person, Semafor reports. The 2015 case ended in a mistrial.

  • Hope Hicks, one of former President Trump’s closest confidants during his White House tenure, sat for a transcribed interview with the House January 6th committee on Tuesday.

RIP: Ashton Carter, who served as Defense Secretary for the final two years of the Obama administration, died this week at age 68, his family announced Tuesday. The cause was a “sudden cardiac event.”

  • A theoretical physicist by training, Carter served under five presidents, in administrations of both parties. As Pentagon chief, he was instrumental in opening combat roles to women and allowing transgender people to serve openly in the military.

🗓 What your leaders are doing today

All times Eastern. Click on an event’s time to watch or listen to it.

Executive Branch

President Biden will receive his daily intelligence briefing (9 am), deliver remarks on “new actions to provide families with more breathing room” (10:30 am), meet with Israeli president Isaac Herzog (12:45 pm), and meet with Defense Department leaders (3 pm).

  • Finally, Biden will participate in virtual fundraisers for a crop of vulnerable Democratic lawmakers: Pennsylvania Rep. Matt Cartwright (7:30 pm), Iowa Rep. Cynthia Axne (8 pm), and the Nevada delegation (8:30 pm).

Vice President Harris is in Seattle. She will deliver remarks at an event highlighting U.S. investments in clean-energy school buses (1:20 pm) and at a fundraiser for Washington Sen. Patty Murray (4 pm) before returning to D.C.

First Lady Biden will travel to Rhode Island, where she’ll deliver remarks at a networking event at Rhode Island College for students interested in careers in education (3:30 pm). The event will be hosted by Handshake, the job search website.

  • She’ll also deliver remarks at campaign events with Rhode Island Gov. Dan McKee (4:45 pm) and congressional candidate Seth Magaziner (5:45 pm). Magaziner’s 2nd District race has grown surprisingly competitive: several polls have shown him trailing former Cranston mayor Allan Fung, who would be the first Republican to win the seat since 1988.

White House press secretary Karine Jean-Pierre will hold her daily press briefing (2 pm).

Legislative Branch

The House and Senate are not in session.

Judicial Branch

The Supreme Court is not in session.

Campaign Trail

Alaska Rep. Mary Peltola (D), former Alaska Gov. Sarah Palin (R), and businessman Nick Behich (R), who are competing in the ranked-choice election for Alaska’s sole House seat, will face off in a debate (11 pm).

That’s all for today. If you enjoy Wake Up To Politics, it’s always appreciated if you donate to support the newsletter or buy some merch. Or if you tell your friends and family to sign up at wakeuptopolitics.com.

If you have any questions or feedback, feel free to email me: my inbox is always open.

Thanks for waking up to politics! Have a great day.

— Gabe