Gas prices have been dropping and the Institute of Energy Research said this is due to inflation and demand deduction destruction, rather than the work of the Biden Administration. | Yassine Khalfalli on Unsplash
Gas prices have been dropping and the Institute of Energy Research said this is due to inflation and demand deduction destruction, rather than the work of the Biden Administration. | Yassine Khalfalli on Unsplash
While gas prices are still much higher than the norm, there has been a noticeable decrease in cost recently. President Joe Biden has taken credit for the falling prices, but the Institute of Energy Research has said the reason for the falling prices are due to "inflation and demand destruction."
"While demand for gasoline has rebounded a bit, it remains below where it was two years ago as historically high prices keep more drivers off the road than COVID lockdowns did in the summer of 2020," IER said in a July 28 report.
On July 22 President Biden tweeted, “Gas prices are declining at one of the fastest rates we have seen in over a decade- we’re not letting up on our work to lower costs even further.”
The gas prices topped out at $5.016 per gallon nationally and on August 10 the price had gone all the way down to $4.010, according to AAA. Pennsylvania’s prices are a bit higher at $4.337.
According to the IER, lower gas prices are mainly due to demand destruction, which is described as “persistent high prices or tight supplies that eventually lead to a drop in demand.” During the week of July 8, the national gasoline consumption decreased by 9.7% to 8.73 million barrels per day, according to the Energy Information Administration. This is the lowest seasonal demand in 21 years, aside from the 2020 pandemic lockdown, and the steepest decline this year. The IER added that rising costs have made it so many can’t pay for gasoline and forced a “buyers’ strike” this summer.
Due to the decreased consumption, West Texas Intermediate oil prices went below $100 per barrel. The $8.50 per barrel premium of Brent oil to U.S. West Texas Intermediate is the largest gap since mid-2019. Due to reduced gasoline consumption, refineries have needed to switch to more profitable fuel production.
“Demand destruction has caused gasoline prices to drop this month in the United States. Gasoline accounts for half of total U.S. oil consumption so the demand drop has also impacted West Texas Intermediate oil price,” IER said.
When prices started rising at an alarming rate, President Biden began placing blame for the rise on the Russian war with Ukraine in early March, as reported by Fox News. The Biden Administration used the phrase #putinpricehike on Twitter and denied that the rising prices, notably gas, were due to his administration’s policies. He said, “make no mistake, inflation is largely the fault of Putin.” He added that it had nothing to do with the American Rescue Plan.
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