FALLING GAS PRICE AT PUMP…GOOD NEWS? NO!!

 JULY 23, 2022  

Cheap gas results from decreased demand and a slowing economy. Not good news. 

President Biden has been bragging today from his basement desk in the White House about falling gasoline prices.  The national average has dropped down to $4.60 this week.  A great deal higher than when he took office.   But the pain remains.  Dr Jill (FLOTUS) on a tour in a Democratic stronghold in Connecticut, got an ear-full from one of that state’s irate citizens still hurting from the high cost of diesel and gasoline. This person heckled her as she tried to enter an ice cream shop with: “Dr. Jill….You and your husband owe us gas money!.”  

Gasoline prices have fallen a bit from the steep $5.00 plus, only a few weeks back.  But  there is no cause for celebration.   Here is why. 

First of all…the price at the pump these days is not quite the real price.  Let us not forget that Joe is still pumping one million barrels of sweet Texas crude each day from our national emergency reserves. That amount has had its effect by artificially increasing supply,  but will not be a permanent fix.  At the present time (under Joe Biden) we import about 8.5 million barrels of oil a day.  In March, President Biden began a release of one million barrels a day from our strategic petroleum reserves. That increase in supply cuts the amount we import to only 7.5 million barrels each day or in effect permits us to decrease imported oil by about 12% (1/8.5 = 0.117 =  about 12% of the total).  If the draw down of oil added to our supply had a comparable effect on price at the pump, the pump price should have dropped by about 12% or about 60 cents —or about the drop in price at the pump we are now experiencing.  Though I suspect that is not the whole story. 

Secondly…for many blue states…like New York and Connecticut— the fear of “gas-price ” angry voters at the polls in a few months has caused Democrat governors  to suspend taking  their state tax on gasoline.  The state taxes vary, but a few weeks back President Biden also proposed to eliminate collecting the Federal gas tax on gasoline at least up to September. That tax amounts to 18 cents per gallon. That amount (0.18 cents) accounts for almost one-half of the 40 cents drop in price experienced these last weeks. 

But these price drops are only temporary, and sadly will return with a big shock when the “unnecessary and unwise wasting” of our strategic reserve ends in September and we have to refill it with more expensive oil. And the state and federal gas taxes will surely be reinstated as they must be. 

So there is a great deal less to brag about than we might expect from listening to the President. 

But that is not all. The price of commodities like petroleum and gasoline are closely tied to demand, when demand drops so does the price.  Gasoline prices fall with an increasing supply—or a-decrease in demand.  There is no indication that petroleum supply has increased (excepting the artificial increase of oil from the Biden release of petroleum reserve oil). 

For that reason, falling gasoline prices should concern us all, since it means the demand for fuel has decreased.  THAT SUGGESTS A LOOMING RECESSION.    In a recession gasoline is always cheap. Who needs gasoline when you have no job to go to, can not afford to go out to dine, or take a vacation in Florida, and there is little need for diesel fuel and tractors when no new buildings going up, no extra fields to plow and plant, and no  new clients need transport from the airport—-and so forth.  

FALLING gas prices mean a decrease in demand and that is not good news for Biden…and for the suffering citizens of this nation as well. 

Thus Joe, bragging about falling gasoline prices is like Dr. Fauci bragging that he helped support the research at the Wuhan lab where the Corona virus might have escaped.         

Biden is fully culpable for the high gas prices.  First he intentionally reduced fuel supply at home by undermining  the US petroleum industry on his first days in office. That decreased US supply and increased price at the pump.    Then in March of this year he sanctioned Russia’s oil supply which simply reduced world supply and sharply increased prices even further.  So what is so irritating about his policies is their stupidity. Today he is releasing oil stored in our strategic reserve (which will have to be replaced) when 18 months ago he could have simply left the fossil fuel industry do its thing and we would have had plenty of oil—and perhaps no looming recession as well. . 

When you pay $80 bucks for a fill up at the pump today rather than the $50 you had been paying before Joe took over…remember why.  Thirty bucks out of your pocket just for Joe’s incompetence!!