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Andrew Kaminsky headshot

High Pump Prices: Oil Lobby Says Blame Russia and Biden, But Economists Say It Ain’t So

By Andrew Kaminsky

Can you remember a more expensive time to fill up at the pump? Me neither. Gasoline and diesel prices are hitting record highs in countries around the world. Why is it so expensive? It’s the war in Ukraine. It’s the sanctions on Russia. It’s Joe Biden’s environmental regulations.

Well, hold on a minute. A recent report from InfluenceMap shows how the oil and gas sector in the U.S. is using the war in Ukraine and high energy prices to promote this messaging and push for expansion of fossil fuel production.

There are a multitude of factors that go into the price of oil and placing the blame for soaring prices on Russia and Biden is missing more than half the story, but that’s the narrative that the fossil fuel industry is running with.

What does the report claim?

On February 24, 2022, Russia officially invaded Ukraine. In the tension build-up prior to the invasion, and in the succeeding months since the invasion, InfluenceMap has recorded a massive spike in the lobbying efforts of the oil and gas sector in the United States.

Between January 26 and April 1, the American Petroleum Institute (API) — one of the most prominent oil and gas lobby groups — ran 761 ads under its ‘Energy Citizens’ banner. Designed to appear like a grassroots organization representing ordinary citizens, the group is controlled by the API and promotes the interests of the American oil and gas sector.

By comparison, in the final three months of 2021, prior to the Russia-Ukraine conflict, the Energy Citizens group published just 67 ads.

The three central messages being pushed by the lobby group are that: 1) Biden’s climate policies have caused a decrease in the supply of oil and gas, causing high prices; 2) the way to stabilize gas prices and increase energy security is to increase the supply of American oil and gas; and 3) liquefied natural gas (LNG) is a clean, low-carbon source of energy that will help achieve emissions reduction goals.

The fossil fuel sector scored a major win with its campaign in March when federal energy regulator, FERC, pulled back its policy that would require an environmental assessment of existing natural gas pipelines.

InfluenceMap and AFP Fact Check have found the group’s messaging campaign to be “misleading.”

How are the lobbyists’ messages on Russia, Biden misleading?

The case for the oil and gas lobby rests on the fact that the high energy prices are caused by a combination of the Russia-Ukraine conflict (including resulting sanctions) and environmental regulations imposed by the Biden Administration. Biden’s policies are being touted as an obstacle to increasing production of oil and gas because it has increased the cost of drilling – costs that are being passed on to the consumer at the pump.

But this isn’t the whole story. WTRG Economics President James Williams provides some insight into the current price hike. 
In early 2020, “we had COVID, which depressed oil prices because it depressed demand. The rule of thumb is that oil needs to be at $40 a barrel to break even, so you don't get much drilling until you get to $60," said Williams, speaking to AFP Fact Check.

The COVID-19 pandemic drove down demand for fossil fuels; travel was halted, businesses were forced to close, and more employees were working from home than ever before. The lessened demand sent the price of oil down. Oil prices even went negative in April 2020. 

The shockingly low prices meant it wasn’t profitable for companies to drill for more oil. The halt in drilling led to a shortage in supply. Now, demand for oil has largely returned to normal levels. High demand and short supply have contributed to a spike in oil prices.

Economists add that Biden’s climate policies will likely have an impact on future oil prices, but they are not short-term price drivers.

Yes, the Ukraine crisis, the sanctions on oil and gas from Russia, and climate regulations have an impact on the price of oil, but they are not as immediately impactful as the lobbyists would lead you to believe. 

New crisis, same tricks

This isn’t the first time that the fossil fuel industry has taken advantage of a crisis to push for more favorable policies.
Not long ago, it was the COVID-19 pandemic that provided leverage for the industry. An InfluenceMap report from April 2020 tracks how the fossil fuel lobby took advantage of the pandemic to lobby for deregulation of their industry.

Profiting from a crisis is nothing new, nor is it isolated to the fossil fuel industry. Acclaimed author and Climate Justice Professor, Naomi Klein, has written extensively about this phenomenon called “disaster capitalism.” It’s corporate nature to make profits wherever possible, even amidst a crisis. The oil lobbyists just happen to be really, really good at it.

Image credit: Mathias Reding via Pexels

Andrew Kaminsky headshot

Andrew Kaminsky is a freelance writer with no fixed location. He travels all corners of the globe learning about the different groups that call this planet home, seeing natural wonders, and sharing laughs with the people he finds along the way. An alum of the University of Winnipeg's International Development program, Andrew is particularly interested in international relations and sustainable development. In his spare time you are likely to find Andrew engaging in anything sport-related, or finding common ground with new friends over a craft beer.

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