Gasoline prices leading into the Memorial Day holiday are the highest they have been since 2014, the US Energy Information Administration (EIA) said today, with an average retail price of $3.02/USG on 24 May. That is just slightly more than pre-Memorial Day prices of $2.85/USG in 2019 but a significant departure from the pandemic-influenced price of $1.88/USG recorded this time last year.
The White House is downplaying the price increase by noting that today's gasoline prices are close to pre-Memorial Day prices in 2018 and 2019, and still less in inflation-adjusted terms than the last 15 years. A return to $3/USG gasoline is also an indication that the economy is recovering, as more consumers hit the road, Biden administration officials say.
"The administration's success in beating the pandemic and getting our economy back on track has led to increased demand for gas as the country re-opens," White house press secretary Jen Psaki said.
Pump prices have been the third-rail of presidential politics for years and had a corresponding influence on policy. The 1979 oil crisis contributed to former president Jimmy Carter losing re-election. Former president Barack Obama considered opening the US Atlantic to drilling as he faced backlash over prices near $4/USG. But abundant supply from shale production and lower prices since 2014 had diminished the potency of the issue, dynamics that might begin to change.
The Memorial Day weekend holiday is a major travel event in the US and marks the traditional start of the summer driving season. The EIA attributed the recent increase in gasoline prices to rising vaccinations and the economic recovery, along with refinery outages and disruptions caused by the five-day shutdown of the 2.5mn b/d Colonial Pipeline system that serves the eastern US.
Republicans lawmakers have argued higher gasoline prices are at least partially caused by Biden's energy policies, such as blocking the 830,000 b/d Keystone XL pipeline — which was still several years away from operating if approved — and pausing federal oil leasing, although those actions are unlikely to have a near-term effect on supply. Oil industry groups are similarly citing the higher gasoline prices to push for policies more supportive of the industry.
"American energy policies should focus on increasing domestic production," American Petroleum Institute president Mike Sommers said. "More US production could put downward pressure on gasoline prices and reduce reliance on imported energy from foreign nations that are hostile to American interests,"
White House policies have not been entirely hostile to the oil sector. The Biden administration this week defended the proposed 160,000 b/d Willow project in the National Petroleum Reserve in Alaska, and today it proposed a rule that would allow oil companies to disturb "small numbers" of polar bears and walruses when operating on the North Slope of Alaska.
Administration officials say they are being mindful of gasoline prices when crafting their policy agenda.
"The president knows that gas prices are a pain point for Americans," Psaki said. "That is why President Biden is opposed any proposals to raise the gas tax. And it is why we will continue to monitor prices."
Some Republicans have pushed to suspend the 18.4¢/USG excise tax on gasoline, which is the main source of revenue for highway spending, to offset recent cost increases. US representative Yvette Herrell (R-New Mexico) this month introduced a bill named the PUMP Act that would stop collecting the tax for at least six months.
"Inflation is rising and American pocketbooks are stretched," she said. "The PUMP Act would immediately reduce gas prices and allow consumers to spend money in other ways, which will help our economic recovery get back on track."
