Federal Reserve Economists Destroy Biden's Excuse of 'Oil Companies Profiteering' for Skyrocketing Gas Prices

Mike Miller reporting for RedState 

If we know anything about the Democrat Party and Joe Biden, it’s that Democrats gonna Democrat and Biden gonna Biden. We also know Democrats Democratting and Biden Bidening includes creating crises, and when the polls go south, blaming Republicans, billionaires, and evil corporations for them.

Case in point: The Biden Oil Crisis™, which was soon followed, of course, by Biden Gas Price Hikes™.

“Shockingly,” that’s not how Biden and the Democrats see it.

Nope, skyrocketing gas prices are the fault of oil-company “profiteering” — a favorite go-to bogeyman of Democrats. And laugh-out-loud ridiculous, Vladimir Putin, as in “Putin’s price hikes.”

So naturally, as gas prices across the country hit new record highs this week, Biden and the Democrats again busted out the worn-out “oil and gas companies are profiteering” talking point and miraculously found a way </sarcasm> to recycle it back into the national conversation — with the liberal media sock puppets again leading the charge.

LIke clockwork, The New Yorker ran an op-ed titled As Gas Prices Reach New Highs, Oil Companies Are Profiteering, in which the left-wing rag claimed “the Biden White House is confronting a form of shareholder capitalism that has no place for modest profits or rallying around Ukraine.”

With the price of crude oil soaring to more than a hundred dollars a barrel this year, and A.A.A. reporting that the average national gas price reached a new high of $4.37 per gallon last week, Big Oil has been making historic profits. In the first three months of 2022, ExxonMobil pocketed $5.5 billion after taxes; Chevron gained $6.3 billion, and ConocoPhillips made $5.8 billion.

Smaller energy producers, which are concentrated in the U.S. and often referred to as wildcatters, are also profiting enormously. Last week, Pioneer Natural Resources reported first-quarter earnings of two billion dollars, and Marathon Oil reported revenues of $1.3 billion.

Beautifully (as if for this conservative political pundit’s benefit), The New Yorker even shared quotes from Biden, including the following, from March:

The CEOs of major oil companies have said they’ll increase investment and production. They have the capacity to do it. My message is: it’s time—in this time of war, it’s not a time of profit. It’s time for reinvesting in America.

But alas, The New Yorker lamented, flying wingman: “Overall U.S. oil production is still running far below its pre-pandemic level. In February 2020, U.S. oil fields generated around thirteen million barrels of crude a day; last month, they produced less than 11.9 million barrels a day.”

And while we’re at it, the piece also quoted Biden blaming the Republicans: “They have no plan to bring down energy prices today, no plan to get us to a cleaner, energy-independent future tomorrow.”

Just one problem with “all of the above.”

As reported by Breitbart News on Friday, economists at the Federal Reserve of Dallas this week published an analysis debunking the Democrats’ “profiteering” excuse for high gas prices. Senior economic analysts Garrett Golding and Lutz Kilian explained that profiteering and price gouging are not contributing to the staggering price of gas.

While U.S. retail gasoline prices in many regions have remained stubbornly high since March, this situation reflects frictions in the retail gasoline market rather than the supply of oil or the price of oil.

Um, Joe?

Golding and Kilian explained two facts in particular that disprove the Democrat myth:

Gas station operators set prices: “Gas station operators set retail prices based on their expected acquisition cost for the next delivery of fuel from the local distributor, federal and state tax rates, and a markup that covers operating expenses, such as rent, delivery charges and credit card fees.”

Nearly every gas station is owned by a company that does not produce oil: “Since only 1 percent of service stations in the U.S. are owned by companies that also produce oil, U.S. oil producers are in no position to control retail gasoline prices.”

I’ll try to avoid the deep weeds, here, but according to Golding and Kilian, the cost of crude oil accounts for roughly 59 percent of the price of gasoline, so a 34 percent increase in the price of oil should reflect a 20 percent increase in the retail price of gas.

Likewise, a 22 percent decline in the cost of oil should translate to a 13 percent decline in the pump price, according to their analysis. However, that has not happened at the national level.

Moreover, the analysts said, the asymmetry of the response of retail gasoline prices does not provide evidence of price gouging — another favorite Democrat charge.

Finally, one potential explanation, according to Golding and Kilian, is station operators are recapturing margins lost during the upswing — when gas stations were initially slow to increase pump prices. The reluctance to lower retail prices also likely reflects concerns that oil prices, and hence, wholesale gasoline prices, may quickly rebound, eating into station profit margins.

The bottom line:

Again, Democrats gonna Democrat, and Biden gonna Biden; the hypocrisy of the left knows no bounds. From the Biden Oil Crisis to the Biden Border Crisis to the Biden Afghanistan Debacle to the Biden Supply Chain Crisis, Bidenomics, Bidenflation, and Biden Gas Prices Hikes, nothing — as in zero — is ever Biden’s fault.

Oh, but it is. All of it.