Many pundits have suggested that one factor for the reduced enthusiasm for Vice President Kamala Harris as the Democratic Party’s candidate for president was that prices of gasoline were higher during President Biden’s term in office than during President Trump’s term. We can confirm that the average retail price of regular-grade gasoline in the US tended to be lower during Mr Trump’s administration than during Mr Biden’s:
Obama 2009- (blue), Trump 2017- (red), Biden 2021- (green). (US Energy Information Administration)The sharp increase in the first half of 2022 is attributable, at least in part, to Russia’s invasion of Ukraine and a disruption of the world’s oil supply and subsequent increases in crude oil prices. As shown, on March 8, 2022, the combination of Russia’s invasion of Ukraine with low global crude oil inventories lifted the 2022 crude oil price to the highest inflation-adjusted price since 2014. The price declined in the second half of 2022.
The sharp increases in gas prices in early 2011 are attributable, at least in part, to the Arab Spring. The Arab Spring and the civil war in Libya roiled oil markets during the first half of the year. Prices quickly escalated when protests in Libya intensified in late February, bringing several years of higher gas prices in the US.
Finally, it’s difficult not to notice the significant drop in gas prices in 2014. The primary factor driving the 60 percent decline in the price of crude from June 2014 to January 2015 was a remarkable growth in US tight oil production. According to the World Bank, “booming US shale oil production played a significant role in the oil price plunge from mid-2014 to early 2016. Efficiency gains in the sector lowered break-even prices considerably, making US shale oil the de facto marginal cost producer on the international oil market.”
In addition to the vast increase in supply late in President Obama’s administration, deteriorating demand prospects played a role as well, particularly from mid-2015 to early 2016. “This partly explains why the oil price plunge failed to provide a subsequent boost to global activity,” the World Bank wrote.
Despite the election outcome and the fact that politicians like to blame or cheer other politicians for gas prices, we have to take a step back and notice that any trend is driven primarily by supply and demand dynamics. Gasoline demand from China is currently low, while crude oil supply from Canada and the US is up. As a result, industry analysts predict that prices will continue to fall over the next few months.
