The White House and top Capitol Hill Democrats are scurrying to limit the political damage from high gasoline prices.
Driving the news: Senate Majority Leader Chuck Schumer vowed to haul Big Oil CEOs before Congress to explain the "bewildering incongruity" between pump costs and the recent crude oil price decline.
- It "smacks of price gouging," Schumer said on the Senate floor Wednesday. That was not long after President Biden tweeted that gasoline prices should be lower, based on the oil price.
- "Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans," Biden said.
The latest: House Energy and Commerce Chairman Frank Pallone, late in the afternoon, invited CEOs of oil majors like Exxon and large independents to testify on April 6.
- The announcement accuses the industry of exploiting the Ukraine crisis and market shocks to "keep prices artificially high and increase their own profits."
Yes, but: Several analysts and economists said the crude-pump price discrepancy simply reflects the time it takes oil price changes to filter through the refined product market.
- For example, Jason Bordoff, an Obama-era White House energy and climate aide, tweeted this in response to Biden's comment:
- "There's a long economics literature explaining 'rockets & feathers' — why gasoline prices go up faster when oil price rises than they fall when oil price drops."
- Rapidan Energy Group President Bob McNally, an energy aide in the George W. Bush White House, made a similar point.
Why it matters: These and other recent allegations of oil companies taking advantage of consumers come as gasoline prices are at record levels (though not if you adjust for inflation).
- That's probably a political liability for Democrats heading into the midterm elections, even though presidents have very little near-term sway over gasoline prices.
- It's also spilling into climate policy debates. Republicans and industry groups are calling for the White House to back off efforts to curb federal leasing.
By the numbers: Crude oil prices have come down a lot over the last week or so. WTI, the U.S. benchmark, fell into the $94-per-barrel range earlier this week after going to about $130-per-barrel earlier in the month. (It regained some ground to about $100 Thursday morning.)
- Gasoline prices have fallen less quickly. Thursday morning, per AAA, the nationwide average is $4.29-per-gallon, compared to $4.32 a week ago.
What's next: This morning PunchBowl News reported that House Democratic leaders are in preliminary talks with rank-and-file members about ideas for lowering prices.
- It's a "recognition that sky-high prices at the pump could be a massive political problem this fall," it notes. Members are batting around ideas including a gas tax holiday and direct consumer rebates, it reports.
