Who’s responsible for the high gas prices that have taken hold across the U.S.? If you listen to your average Republican, you’ll hear blame placed on the energy and climate policies of the Biden Administration—with some even suggesting that a nefarious “Green New Deal” has led to the price hike. Meanwhile, Democrats, including many in the Biden White House, will point to “price gouging” by greedy oil and gas executives who are manipulating consumers.
Depending on how generous you’re feeling, these explanations are half truths, at best, or bald-faced lies, at worst. High gas prices are the result of a complex set of circumstances—including the Russian invasion of Ukraine, supply chain challenges, and other market dynamics—and can’t be easily boiled down into a talking point.
Of course, it’s easy enough to understand why politicians, oil executives, and political commentators have relied on such rhetoric. While elected officials compete for votes in a hot election year, fossil fuel companies fight for a lucrative future during the clean energy transition. With these stakes, it’s hard to imagine any player changing course and embracing nuanced, heady positions about the economic and political factors contributing to high gas prices.
When we look at the issues of transitioning from fossil fuels to addressing the now inevitable and rapidly unfolding climate impacts, details are crucial. We can see how policymakers often miss the big picture in the debate over gas prices.
Understanding the misrepresentations around gas prices, it’s helpful to look first to Republicans, who have been using climate as a political cudgel for decades. Republicans repeatedly used the argument climate policy would cost consumers in order to deflect all legislative attempts to lower emissions. So it came as little surprise that they blamed Biden and his climate agenda when gas prices started to rise, in some cases asserting that his “Green New Deal” had driven up prices.
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“In some parts of the country, the price has crossed $6.90 a gallon. This was not an accident,” Sen. Ted Cruz (R., Texas) said during a meeting of the Senate Committee on Commerce, Science, and Transportation. “This was the result of the Green New Deal zealots in the Biden Administration.”
It almost goes without saying that this—especially in the most extreme version—is totally false. Biden failed to even implement basic climate policies, much less a Green New Deal. The Administration is also working tirelessly to identify any policy lever that could lower gas prices. This understanding of poor political outcomes and high gas prices has led to the Administration focusing its efforts on other areas.
The Administration tried to make the world aware that it was not the future of fossil fuels from its very beginnings. Biden, along with others from the Administration, have claimed that this signal has been one of their most important contributions to climate change. Although this dynamic is not well-defined and is certainly not the primary reason for the current high prices, it does contribute to the larger global consensus to shift money away from fossil fuel investments. This is an important fact. As the energy transition advances, policymakers pushing climate policy will need to be able to make the case for a continued shift of investment away from fossil fuels and toward clean energy—even amid volatile fossil fuel prices.
A little more information is needed about the Democratic talking points. The fact that oil and gas executives have made record profits has been cited by activists who are against the industry. Many Congressional Democrats supported this line of thinking and introduced anti-price gouging legislation. Meanwhile, President Biden called on the Federal Trade Commission to launch a consumer protection investigation last November as gas prices began to rise even before Russia’s invasion of Ukraine. “The Federal Trade Commission has authority to consider whether illegal conduct is costing families at the pump,” Biden wrote in November. “I do not accept hard-working Americans paying more for gas because of anti-competitive or otherwise potentially illegal conduct.”
It’s certainly true that energy companies are enjoying record profits this year as oil prices have soared. But generating a large profit doesn’t necessarily—or even usually—equal price gouging. Prices for oil have increased because of rising demand (the economy has continued to grow after COVID) and falling supply (Russian crude is not welcome in much of the rest. The U.S. is simply continuing to operate in this context. Some Democrats say this shows price gouging. Companies should respond to market demands and produce more.
It’s true that U.S. oil companies could plan to ramp up their production, though it would take months to years before this affects the market. Oil companies don’t want to do that out of fear that more production could lead to too much production and drive down prices—and profits. Overproduction has led to years-long losses in the oil industry over the past decade. So while it’s obvious that oil executives are looking after their profit, it’s unclear how that adds up to price gouging. A recent report from the Congressional Research Service boils down its definition of price gouging to “unfair” inflation of prices by companies to take advantage of an emergency situation.
Why bother to debate this rhetoric? These talking points are distracting and misrepresent our climate and energy challenges. It is quite wrong to say that Republicans have adopted draconian policies in climate change when they are needed by the global community. A little deeper is the problem with Democratic rhetoric at a higher level. The problem isn’t that companies are violating American laws and norms by engaging in practices like price gouging; the problem is that American laws and norms haven’t adjusted to the energy and climate challenges we face today. It is perfectly legal to emit carbon dioxide into the atmosphere and make a huge profit while also being supported by the government. Our problems can be solved faster if people are honest about them.
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