The White House is scrambling to help solve a massive surge in gas prices that increasingly is seen as a weight that could leave Democrats suffering a rout in this fall’s midterm elections.
Energy Secretary Jennifer Granholm is expected to convene an emergency meeting in the coming days. Meanwhile on Wednesday, President Biden’s economics team gathered alongside outside advisers to discuss various options. More meetings are expected again on Thursday.
The White House is also flirting with endorsing a federal gas tax holiday while readying for a controversial summit with Saudi Arabia where the global fuel supply is expected to be a major point of discussion.
Robert Wolf, the former CEO of UBS Americas who served as an economic adviser to former President Obama, was spotted at the White House on Wednesday two days after The Hill wrote he was in support of the gas tax holiday.
“All options are being considered obviously,” said one administration official without specifying if the idea was gaining traction.
In a sign of a more aggressive approach to the crisis, the White House on Wednesday released a letter that Biden sent to seven major oil executives chiding them for making large profits amid the spike in gas prices and demanding they take actions to boost the supply of gasoline, diesel and other refined products on the market to help ease the burden on American consumers.
“I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office. But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,” Biden wrote in letters to executives at Shell, Exxon Mobil and other companies.
Rising gas prices exacerbated by Russia’s war in Ukraine topped $5 per gallon on average nationally over the weekend, a major political liability for Democrats ahead of the fall midterm elections.
One Democratic strategist said something had to be done quickly to help ease the soaring costs or Democrats would pay heavily at the polls.
“I know we’re still months out but everyone is hurting and people are blaming Democrats for this. If they don’t do something quickly we’re completely f—-d and they know it,” the strategist said. “Trump was insane, but people weren’t facing this kind of economic turmoil and this is the kind of stuff that voters deeply care about.”
The National Republican Congressional Committee released a new set of advertisements Wednesday trying to tie vulnerable Democrats to high gas prices.
Signaling the urgency facing the administration, White House press secretary Karine Jean-Pierre kicked off Wednesday’s briefing by talking about Biden’s efforts to lower gas prices, including ordering the largest-ever release from the Strategic Petroleum Reserve earlier this year and allowing sales of higher-ethanol gasoline during the summer.
Jean-Pierre also highlighted Biden’s letter to oil companies and argued they have a patriotic duty to work with the administration to lower gasoline prices during the war.
“We are calling on them to do the right thing, to be patriots here,” she told reporters.
Jean-Pierre also said the president was willing to use emergency powers to boost refinery output and capacity, though she provided few specifics on what that could look like.
In a statement responding to Biden’s letter, Exxon Mobil suggested the federal government waive the Jones Act and other fuel requirements in order to boost supplies over the short term, and to streamline approval for pipelines and support domestic investment in the long term.
But the Biden administration has limited options when it comes to assuaging high gas prices and inflation more broadly. And calling for more oil production in the short term seems inherently at odds with Biden’s climate change and clean energy agenda.
“It’s insane, but they cannot do much,” one Biden ally said. “It’s a global market and the perfect storm hit from big demand post-COVID, lower supply and the war.”
Inflation is being fueled by the COVID-19 pandemic and resulting supply chain issues, as well as the government spending in response to the pandemic during the Trump and Biden administrations. Russia’s war in Ukraine has disrupted global energy markets and food supplies, driving up prices further.
The Federal Reserve, which plays the primary role in responding to inflation, announced Wednesday it would hike interest rates by 0.75 percent – the biggest increase in nearly 30 years – in a bid to quash inflation.
Speaking to reporters Wednesday afternoon, Federal Reserve Chairman Jerome Powell noted that the Fed can’t do much to affect energy and food prices, however, noting that they are largely set by global commodity prices.
Biden next month will travel to Saudi Arabia as part of his first presidential trip to the Middle East, a stop that is expected to focus in part on energy prices. Saudi Arabia is the informal leader of the Organization of the Petroleum Exporting Countries and a major oil producer, and the administration has tried to persuade the country to pump more oil to help alleviate gas prices.
Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, said that it would send an important signal if Saudi Arabia were to commit to bringing additional supplies online more quickly somewhere in the neighborhood of half a million barrels per day.
But it’s unlikely that the visit, even if it’s fruitful, will solve the current crisis. Biden has also been criticized for a planned meeting with Saudi Crown Prince Mohammed bin Salman, who the U.S. intelligence community says approved the 2018 assassination of U.S.-based journalist Jamal Khashoggi.
Experts say that gas prices are likely to continue to rise in the coming weeks. Mark Zandi, chief economist at Moody’s Analytics, predicted that domestic gasoline prices would peak in the next few weeks and begin to level off around the July 4 holiday, before starting to decline in the fall months.
Another Democratic strategist was frustrated and said the worst is yet to come.
“We’re not in a recession yet. We’re not looking at 10,000 people laid off, 15,000 laid off. It’s going to get so much worse,” the strategist said. “These guys have f—-d things up and they know it. The midterms are decided, and that’s against a party that’s too dumb for their own good.”