Concerns over gas prices put Biden White House in deadlock on climate policy

The Biden White House increasingly sees rising gasoline prices as a source of potential political peril – and is now asking some of the world’s largest oil producers to pump more oil.

Why is this important: This trend, combined with a fragile economic recovery threatened by the Delta variant of the coronavirus and inflation starting to weigh on consumers, could threaten the administration’s ambitious Congressional agenda for late summer and early summer. autumn.

Driving the news: The administration made two revealing moves on gas prices on Tuesday morning.

• One was to ask the Federal Trade Commission to investigate “market manipulation or anti-competitive practices” influencing the retail price of gasoline.
• The other was the publication of a memo from National Security Advisor Jake Sullivan criticizing the recent decision by OPEC + countries to increase production by 400,000 barrels per day through December as “everything simply not enough “to avoid jeopardizing the international economic recovery.

The big picture: Urging OPEC + to produce more crude oil is, at least on the surface, inconsistent with Biden’s climate agenda of moving the country away from dependence on fossil fuels. It was also a particularly dissonant move that came just two days after the UN’s IPCC issued its toughest warnings to date on the impact of man-made global warming.

Between the lines: The FTC letter and Sullivan’s memo arrived on the same day that the White House National Climate Task Force met to discuss the IPCC report and the overall progress of the president’s agenda to reduce climate change. greenhouse gas emissions and improve climate resilience.

In numbers : Gas prices rose from $ 2.24 a gallon in January to $ 3.172 on August 9, according to the EIA.

What they say : A White House official told Axios that the administration can simultaneously push forward its ambitious climate agenda while being “vigilant” so that middle-class families do not suffer from a temporary increase in gas prices as the economy is emerging from its pandemic recession.

• The official said that while current gas prices are within the range seen in recent years, crude oil prices have climbed higher than pre-pandemic levels.

The big picture: According to Bob McNally, founder and chairman of Rapidan Energy Group, who served on the National Security Council during George W. Bush’s administration, Biden’s team is taking action amid growing concerns about inflation, but not just among the public.

• McNally said it was clear that top Capitol Hill lawmakers, including moderate Senators Joe Manchin (DW.Va.) and Kyrsten Sinema (D-Arizona), are inflation-tuned and are likely to seek a more modest spending bill reserved for Democrats.
• “I think what the White House has done is realize that inflation is a clear and current threat to our political agenda, which means not only the president’s support for the polls, but in fact the adoption of climate policies and strong human infrastructure later this year, ”McNally told Axios.
• “Gasoline prices are the tip of the spear, if you will. They are the most politically toxic and dangerous price that goes up.”

Yes, but: The latest Axios Engagious / Schlesinger swing voters focus groups, held Tuesday night, showed that rising gas prices are not yet a priority issue in the minds of swing voters who have switched from voting for Donald Trump. in 2016 to support Joe Biden. in 2020.

• Not a single swing voter out of 13 participants from six pivotal states in the 2020 election said the price of gasoline would make them vote for or against a candidate.
• While a focus group is not a statistically significant sample like a poll, the responses show how some voters in crucial states think and talk about current events.

Oil analyst Ellen Wald told Axios that national oil production has remained stagnant despite the increase in gas demand during the summer.

• She said surveys show that the administration’s climate program is making domestic producers reluctant to increase oil production.
• “There is regulatory uncertainty and there is just this idea that they are going to meet resistance from the Biden ministry. And so that prevents a lot of producers from producing, which reduces American production,” she said. declared.
• This gives OPEC + more leverage on US gas prices, especially Saudi Arabia, which has a lot of excess production capacity.

The bottom line: In order to push through sweeping climate policies while avoiding further inflationary pressure, the administration is pushing for OPEC + countries to produce more fossil fuels, however hypocritical it may seem in the short term.