To the editor:

Are you worried about high inflation? High gas prices? If so, you have company. There has been a lot of finger-pointing about the causes, so it may be helpful to look at some facts.

The U.S. Consumer Price Index put inflation at 8.5% as of the end of March. But inflation is a global phenomenon. In the 19-member Eurozone the average rate of inflation was 7.5% at the end of March. It is mistaken to blame the Biden Administration for this global situation.

What are the causes of this inflation? Energy costs, including oil, are a major source. “COVID changed the game, not President Biden,” according to Patrick De Hann, head of petroleum analysis for GasBuddy. Abhiram Rajandran, head of oil market research at Energy Intelligence, adds “when you throw a war on top of this, this is possibly the worst escalation you can have.” COVID severely disrupted supply chains and created havoc in the oil market. Russia’s war in Ukraine has led to shortages and sanctions limiting exports from a major oil producer.

Crude oil prices are set on global markets, responding to global supply and demand. Those prices account for over 50% of the cost of gasoline at the pump. According to Rajandran, Biden Administration prices have played a “very, very small role in pushing gas prices up.” In fact, in its first year, the Biden administration approved 34% more drilling permits on federal lands than did the Trump administration in its first year.

The Biden administration has taken some steps to try to ease supply problems. It is releasing one million barrels of oil per day from the U.S. strategic oil reserve. Biden has asked OPEC, which controls over 40% of the world’s oil supply, to increase production. However, OPEC is only increasing production very gradually. There have also been calls for U.S. oil companies, which are seeing record profits, to increase investment. But having been burned by collapsing oil prices early in the pandemic, they are choosing instead to reward their investors with higher dividends and stock buybacks, not investing in more drilling.

Let’s face it. COVID supply chain disruptions haven’t disappeared yet, and, admit it or not, we are in a (cold) war with Russia. These events have costs (the Ukrainians are enduring much worse).

Claire Gilmore

Tupper Lake

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Sources:

Kosahowski, Paul, “What Determines Oil Prices?” December 14, 2021. Www.investopedia.com.

Klippenstein, Ken, “Saudi Arabia Rejects Biden Plea to Increase Oil Production as Midterms Loom.” Www.the intercept.com

“Inflation in Germany and Spain reaches record levels, driven by Russia’s war,”. New York Times, March 30, 2022.

Alderman, Liz, ” Energy prices in Europe soar 45% as inflation hits another record,” New York Times, April 1, 2022.

“Biden’s Plan would release a million barrels a day from reserves,” New York Times, March, 31, 2022.

Herron, et Al., Oil’s Spectacular Covid Crash Set the World Up for $100 Crude,”. Bloomberg, February 16, 2022.

Yubanet.com. Report: Oil Giants Post Eye-popping $205 Billion Profits , March 15, 2022