Publications: Notes at the Margin

Biden's Oil Market Disruption (January 20, 2025)

 

US President John F. Kennedy was apparently fond of the phrase “Don’t get mad, get even.” President Theodore Roosevelt had a different favorite: “Speak softly and carry a big stick.”

 

President Joe Biden, who leaves office at noon today, has done both. Biden, whom Donald Trump has repeatedly mocked as “sleepy Joe,” is departing with one of the lowest presidential approval ratings ever, according to Gallup. To his credit, though, as president, Biden did everything possible to keep energy prices down. He failed, in part because his advisers did not understand the market power of refiners, who happily bought low-priced crude from the US Strategic Petroleum Reserve while letting gasoline prices rise.

 

Consumers punished Biden and the Democrats for high-priced gasoline at the polls. In his last week in office, Biden responded by laying the ground for $4 per gallon gasoline as he imposed drastic sanctions on Russian oil exports. In doing so, he made use of a law that gives Congress the power to veto any attempts to remove the sanctions. This action could make it difficult for the Trump administration to lift the Biden measures, especially since many Republican politicians represent oil-producing areas that will benefit from the crude price rise caused by the Biden “disruption.”

 

While Trump bellowed, Biden acted. Americans will pay dearly. The global economy will slow, especially if the new president imposes his proposed tariffs. Oil and gas producers in the US and abroad will profit. As his last gesture, Biden said little but wielded a big stick.

 

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