Biden could soon feel 'political heat' from higher gas prices

By Chris Matthews

A retail price of $4 per gallon is a level where the president's re-election hopes could be in trouble, says Daniel Yergin of S&P Global

'[T]he price that now matters the most is that political perennial - the one at the petrol pump.'Daniel Yergin, S&P Global

President Joe Biden's re-election hopes could hinge on the price of gasoline, and rising oil prices are likely a top concern among his campaign team.

That's according to Daniel Yergin, S&P Global vice chair and longtime energy analyst, in a Tuesday op-ed in the Financial Times.

He said a recent decision by the OPEC+ oil-exporting countries to reduce exports has led to a jump in prices - a nearly 6% rise for the North American benchmark price (CL00) in June alone, according to FactSet.

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Average prices for gasoline are also rising, to a current average of $3.47 per gallon, up from $3.10 six months ago, according to AAA, which compiles the data.

That's even as Biden has presided in the past two years over a dramatic overall cool-down in U.S. inflation, writes Yergin.

Gas prices "could certainly go higher with the summer increase in demand, as motorists take to the road and the risk grows" of a wider war in the Middle East, Yergin wrote.

"On top of that, the onset of hurricane season adds the danger of a major storm disrupting the huge oil complex in the Gulf of Mexico and along the Gulf Coast," he added.

'Gas prices are probably the greatest risk factor facing Biden right now.'Justin Begley, Moody's Analytics

Biden began to release oil from the Strategic Petroleum Reserve in 2021 to smooth out disruptions in the market due to the easing of the effects of the COVID-19 pandemic and following Russia's full-scale invasion of neighboring Ukraine in February 2022.

At its peak, the reserve had been drawn down by 40%, though the administration has been refilling the reserve in recent months.

The administration also announced last month that it would release 1 million barrels of gasoline from the nation's Northeast Gasoline Supply Reserve to help lower retail prices at the outset of the so-called summer driving season.

An recent analysis by Moody's Analytics showed that gasoline-price volatility is potentially the most important economic risk that Biden faces in his re-election bid in November.

"Gas prices are probably the greatest risk factor facing Biden right now, because it wouldn't take much to cause gas prices to move higher," Justin Begley, an economist at Moody's Analytics told MarketWatch in a recent interview.

Yergin said that Biden could consider releasing additional oil from the SPR, or attempt to convince Saudi Arabia to restore oil supply to the market as soon as possible.

With national gas prices where they are today, Biden may be positioned to survive his re-election battle in November, Yergin argued. "It is when prices begin to approach $4 per gallon that the political heat really begins to rise," he wrote. "And they could well get there over the summer and into early autumn if crude prices go up."

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-Chris Matthews

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06-25-24 1244ET

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