Welcome to the party, pals. Gas prices and chip shortages have made consumers desperate for months, so the White House is a little late to the feeling. The Washington Post reports that Joe Biden’s team hasn’t advanced much past the spitballing stage, however, thanks in part to another crisis they’ve managed to fumble for more than a year:
Senior White House aides have in recent days explored new ideas for responding to high gas prices and looked again at some that they had previously discarded, desperate to show that the administration is trying to address voter frustration about rising costs at the pump.
Biden officials are taking a second look at whether the federal government could send rebate cards out to millions of American drivers to help them pay at gas stations — an idea they examined months ago before ruling it out. Aides had found that shortages in the U.S. chip industry would make it hard to produce enough rebate cards, two people familiar with the matter said. White House officials also fear there would be no way to prevent consumers from using them for purchases other than gasoline, according to another person familiar with the discussions. Even if the administration embraces the proposal, it would probably require congressional approval and face long odds among lawmakers wary of spending more money.
Biden aides have also looked in recent days at invoking the Defense Production Act to move diesel and other refined products should localized shortages materialize, two people familiar with the matter said. Diesel prices have risen markedly, posing a major threat to the nation’s trucking and shipping industries, although experts say shortages appear to remain unlikely for now.
Why are shortages on diesel unlikely? First off, they largely rely on domestic supply, so the supply-chain issues won’t impact production. More importantly, diesel has a market-equilibrium price at the moment based on the cost of that supply and the level of demand. It’s that equilibrium that has producers making relatively stable net-profit margins (no gouging) and a stable level of supply. If the Biden administration imposes price caps — one of the options pushed by progressives — that equilibrium will vanish quickly and the shortages will break out all over.
In fact, the Post mentions those proposals as well, emphasis mine:
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Other proposals floated by policy experts include suspending the Jones Act, which would reduce shipping costs and make it cheaper to get gasoline from the Gulf Coast to the Eastern Seaboard, imposing price controls and banning exports of U.S. energy. But all these ideas have their own political and practical downsides, with the Jones Act supported by influential union groups, and economists warning that any supply restrictions could exacerbate the problem.
At least for now, sanity reigns on price caps. However, no one’s talking about the real solution, which would be to attack the real problem — Joe Biden’s insane energy policy, especially his EO 13990 that all but shuts down any new expansion of oil and gas production in the US. Instead, as one adviser told the Post, Biden and his team are trying to distract from Biden’s failure by focusing on their narratives:
“Not only is there not an extant solution, but nobody thinks there’s going to be a compelling solution,” an outside economic adviser to the White House said. “They’re fighting about narrative rather than fighting about substance, because realistically, what are they going to do?”
What else? Well, the rebate card idea shows that the Biden administration remains convinced that they can spend their way out of any political jam, even the crises that they spent themselves into in the first place. The fact that they got tripped up over the chip shortage to which they’ve only paid fitful attention over the last seventeen months is almost perfection. If it hadn’t been for that, though, does anyone doubt for a hot second that Biden would have proposed it anyway and then tried to blame Republicans for blocking “free money” from getting to voters? Even while the cost of Biden’s “free money” from March 2021 keeps becoming more and more clear to those same voters?
If Biden wanted to solve the gas-price issue and take a big bite out of inflation at the same time, he should rescind EO 13990, acknowledge that oil and natural gas need to remain a vital part of this nation’s strategic energy profile, and then build incentives for rapid expansion and addition of refining capacity. It’s too late for that to pay off in time for November, but it might pay off in time to give Democrats a chance in 2024. Biden will never change course, though, so just plan on more economic destruction for the next thirty-one months.
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