U.S. consumer prices were 9.1 percent higher in June than a year earlier, the biggest annual increase in four decades. Gasoline prices are one of the major factors, as the price of gas affects commuters, the delivery of food and other goods, as well as those aching to travel this summer. The good news is that the price of gas has fallen in recent weeks by about 40 cents per gallon, the longest decline since the collapse in energy demand in early 2020, when the pandemic kept many consumers at home. Nevertheless, gas is still averaging about $4.57 per gallon (as of July 15) according to AAA. That's a pretty steep leap up from the average of $3.15 per gallon we were paying last year.
So of course, gas prices and domestic energy production have become a political tool that Republicans use to condemn the policies of the Biden administration. On July 14, Ohio Republican congressman Jim Jordan tweeted, "Inflation isn’t getting better until gas prices go down. And how do you get gas prices down? Drill DOMESTICALLY. Sadly, Joe Biden and the Democrats refuse to." The tweet was shared by thousands.
We rate this claim as mostly false due to its inaccuracy. Policies and decisions by the Biden administration have nothing to do with the current price of gasoline. The one-two punch of recovery from the COVID-19 pandemic followed by Russia’s invasion of Ukraine is the reason for the high gas prices. The price of crude oil, which is a major factor in the price of domestic fuel, is controlled by the supply and demand of oil globally. According to the American Petroleum Institute (API), the main factors impacting gasoline prices are the cost of global crude oil (61 percent), refining costs (14 percent), distribution and marketing costs (11 percent) and federal and state taxes (14 percent). In other words, when the price of a barrel of crude oil rises in the global market, we see an eventual rise in the price of gas domestically.
As reported by Maria Azzurra Volpe in Newsweek back in May...
There's no specific body or policy that regulates the oil and gas industry in the U.S. but federal, state and local governments each regulate various aspects of oil and gas operations. Who regulates what mostly depends on land ownership and whether the territory is covered by federal regulations or state laws.
In general, according to research by the American Geosciences Institute (AGI), most drilling and production is regulated by state laws, while federal regulations mostly safeguard water and air quality, worker safety, and exploration and production on Native American and federal lands.
In addition, there isn't much a sitting U.S. President can do to get more oil from U.S. producers. Brittany Cronin of NPR has written an excellent article explaining how difficult it would be for U.S. producers to drill for more oil.
U.S. crude production currently stands at 11.6 million barrels per day, according to the latest data from the U.S. Energy Information Administration. That's below March 2020 levels, when the country was producing 13 million barrels per day of crude oil.
Farzin Mou, vice president of intelligence at Enverus, an energy analytics company, warns that boosting supply was not easy even before the coronavirus pandemic wreaked havoc on the supply chain.
"The point from which you drill a rig to the point that you can turn it online, it takes about six to eight months typically," she said.
Now add in the difficulties that oil producers are facing to procure materials like sand and steel, and it becomes clearer that producers are unlikely to provide a quick fix to current gas prices.
Not really. The United States in 2020 was the biggest oil producer in the world and also the biggest consumer — but it is just one player in a global oil market. (“Oil” includes crude oil, all other petroleum liquids, and biofuels.) Much of what happens in the market is beyond the government’s control.
In 2021, the United States slipped to third place in oil production, behind Russia and Saudi Arabia. That’s mainly because large shale companies committed to Wall Street that they would continue to limit production and return more cash to shareholders — “an effort to win back investors who fled the industry after years of poor returns,” according to the Wall Street Journal. Scott Sheffield, chief executive of Pioneer Natural Resources, told investors in February: “$100 oil, $150 oil, we’re not going to change our growth rate.”