For the past couple of weeks as the petrol prices have been spiking, I’d been hearing of this trend where some wiseacres were attaching “I Did That!” stickers featuring President Biden to the pumps.
Tonight as I was topping up the Traverse’s cavernous petrol tanks, I finally saw one in the field!
I’ll admit, I did laugh a bit when I saw it.
Sadly, the people who had the wit to poke fun at President Biden seem to miss the point that even though I’m sure they’d love him to have some magical power to reduce petrol prices, the plain facts are that President Biden really has very little power to actually do so.
And whilst there have been several theories blaming everything from the war in the Ukraine to President Biden and everything in between, the real reason that the oil production that was shuttered when COVID-19 and the lockdown-induced cratering of demand depressed oil prices so badly that at one point the oil producers were actually paying speculators upwards of $34/barrel for them to take the oil off their hands!
The oil companies shut down a fair heap of refineries as a result and are only now starting to bring that production back online. But anyone who knows anything about the industry knows full well that restarting a refinery isn’t a matter of turning a key and it works…there’s lots of checks and other work that goes into finally turning on the taps and refining the crude into usable products that often takes months to bring online.
No amount of allowing oil companies the leases to drill or reversing course on the Keystone XL pipeline (which really wouldn’t solve the supply problem in the US as it was meant to ship oil sands petroleum from Alberta to the Gulf Coast ports) will make up for the fact that prices are spiking primarily because the price of the crude oil that is refined to petrol is spiking due to a much lower supply in the face of high demand.
President Biden tapping the Strategic Petroleum Reserve will eventually help drive down prices at the pump but that’s months down the road as the domestic producers start ramping up post-pandemic production and refining.
But that won’t save him from being pilloried in the polls because it’s far easier blaming one person than the many entities that are contributing to the high inflation throughout the economy driving petrol prices through the roof.
And even though I’m sure he’d love to wave a magic executive order pen and lower prices at his command…the fact remains that he really doesn’t have any power to actually do that.
He has to depend on the oil producers to ramp up production and allow the supply and demand of the marketplace stabilise just as we do. And that’s not going to happen quickly as long as oil producers have an incentive to restore production very slowly to take advantage of the high prices to offset the losses they suffered at the height of the pandemic.
So whilst the sticker is funny in a darkly humourous sort of way…it’s also patently unfair to just blame President Biden when he’s only a very small part of the vast oil ecosystem.
