Biden Takes Aim at High Gas Prices
With energy prices hitting multiyear highs ahead of the holiday season, President Joe Biden on Tuesday ordered the release of a record 50 million barrels of oil from the nation’s Strategic Petroleum Reserve.
The release is being coordinated with China, India, Japan, South Korea and the United Kingdom as part of an effort to put downward pressure on oil prices globally. Experts expect a total of roughly 100 million additional barrels to be brought to market worldwide in the coming weeks, the largest single release from reserves in history.
Gasoline prices are at $3.40 a gallon on average in the U.S., an increase of more than 50% from a year ago. The release from the U.S. strategic reserve, which currently holds about 605 million barrels, should have a noticeable effect on gasoline prices within a few weeks, GasBuddy.com analyst Patrick DeHaan told Bloomberg News, resulting in a decrease of 5 cents to 15 cents per gallon.
But the effect of the release, which will cover about two-and-a-half days of use in the U.S., could be short-lived. “The problem is that everybody knows that this measure is temporary,” Claudio Galimberti of Rystad Energy told the Associated Press. “So once it is stopped, then if demand continues to be above supply like it is right now, then you’re back to square one.”
Inflation looms large: In comments at the White House, Biden highlighted positive economic news such as strong growth and a low unemployment rate while portraying the recent surge of inflation in the U.S. — and higher gas prices — as temporary problems that his administration is acting to solve. “I will do what needs to be done to reduce the price you pay at the pump,” Biden said.
In addition to the release of oil, Biden discussed the “port action plan” the White House announced earlier this month that is intended to clear up the supply chain congestion at the nation’s ports, a key factor in the recent wave of price hikes. Most of the funds for the effort were provided by the bipartisan infrastructure package Biden signed into law last week, which set aside $17 billion for port improvements.
The president also said that he had spoken to executives at retailers and shipping firms, including Walmart, Target, UPS and FedEx, to make sure that store shelves are fully stocked for the holidays.
Still, the president’s ability to affect significant changes in prices is limited, especially when it comes to energy. With gasoline prices, opening the strategic oil reserve “is the only thing within policy control at the moment,” Anastasia Amoroso of iCapital Network told Bloomberg.
More broadly, the White House could have a tough time fighting inflation, which is hurting Biden politically. Inflation hit a 30-year high in October by one measure, rising 6.2% on an annual basis — a statistic that will be used to push back against the Build Back Better bill that contains much of the president’s domestic agenda.
The Build Back Better Act passed by the House last week would cap out-of-pocket costs for insulin at $35 a month starting in 2023, lowering the cost of the vital diabetes treatment for millions of people covered by Medicare or private insurance plans.
As the Senate prepares to take up — and, likely, to revise — the legislation, Senate Majority Leader Chuck Schumer (D-NY) over the weekend touted the insulin provision and warned Republicans against trying to nix the new cap.
“We are here today to tell the GOP to lay off! Do not try to attempt to kill this provision,” Schumer said at a press conference in New York. “Ten years ago insulin was cheap and easy and accessible. But all of a sudden, it’s gone up 12%, 15%, 17% a year, so now it’s as high as $600. And this is not a drug on patent. This is not one of those things that’s protected by patent. So there’s no reason the cost should be so high.”
Schumer said that he would do everything he can to keep the provision in the bill.
The background: Insulin has been available for nearly a century, but its price has doubled or tripled over the past decade, according to a bipartisan Senate report release early this year. Those surging prices have put insulin front and center in efforts to tackle high drug prices, with lawmakers in both parties looking to limit what patients pay for it.
“House Republicans have an alternative to Democrats’ drug pricing measure, which includes a monthly $50 cap on insulin and its supplies after Medicare patients hit their deductibles,” The Washington Post’s Rachael Roubein notes. “In the Senate, the top-ranking Republican lawmakers on the chamber’s health panels have a bill that includes making permanent a pilot project giving those on Medicare the option to get a voluntary prescription drug plan where insulin only costs $35 a month.”
The politics: “Curbing insulin costs is politically popular – and Democrats seem aware that Republicans could anger voters by challenging such caps,” Roubein writes, adding that Republicans have not yet detailed which of the Build Back Better bill’s health care provisions they may challenge.
The bottom line: While Republicans remain opposed to the Build Back Better package as a whole, Roubein reports that the key question now may be whether the Senate parliamentarian nixes the insulin cap as violating the budget reconciliation rules Democrats are using to pass the legislation without GOP support. Until that verdict comes down, Democrats are looking to publicize their cap and score some political points. “If Republicans want to defend higher insulin prices going into an election year, that’s a win for Democrats,” one Democratic aide told Roubein.
Quote of the Day
“It’s sort of a roller-coaster ride when it comes to a net tax change for folks, both at the bottom and at the top.”
– Garrett Watson, a senior policy analyst at the Tax Foundation, in a CNBC article explaining that tax bills may fluctuate over the next few years if the Build Back Better bill is enacted, “as tax provisions affecting low and high earners phase in and out.”
Top earners would face a higher tax rate but would ultimately pay less in 2022, according to estimates from the congressional Joint Committee on Taxation. “That may sound like a counterintuitive outcome,” CNBC’s Greg Iacurci writes. “But the rich, especially those subject to the [new Build Back Better] surtax, would likely change their behavior to avoid a higher tax rate. Specifically, the surcharge would likely cause a ‘shift of income’ into this year, according to the Committee.”
Number of the Day: $127.5 Million
The federal government has reportedly reached a tentative $127.5 million settlement with the families of victims of the 2018 shooting at the Marjory Stoneman Douglas High School in Parkland, Florida. Families of the shooting victims sued the Justice Department over the FBI’s failure to investigate tips that the gunman was planning an attack. Seventeen people were killed in the massacre, one of the deadliest school shootings in U.S. history.
“The settlement comes a month after the Justice Department agreed to pay $88 million to the families of those killed at a 2015 shooting at a historic Black church in Charleston, S.C. — which occurred after the FBI did not conduct a thorough gun-purchase background check of that gunman,” The Washington Post reports.
- Biden Aims to Do What Presidents Often Can’t: Beat Inflation – Associated Press
- Democrats Zero In on Cost of Living to Sell Biden Agenda: Memo – The Hill
- Biden Bill Has Tax Cut for Mere Millionaires, Hike for Mega Rich – Bloomberg
- G.O.P. Donors Back Manchin and Sinema as They Reshape Biden’s Agenda – New York Times
- Brainard Gives Biden a Jobs Ally Alongside Fed’s Inflation Hawks – Bloomberg
- US Bond Bulls Hold Their Ground in Face of Red-Hot Inflation – Financial Times
- Every Step of the Global Supply Chain Is Going Wrong — All at Once – Bloomberg
- For-Profit Colleges Fight Exclusion From Pell Grant Increase in Biden’s Spending Bill – Washington Post
- 3 in 4 Americans Say Their Lives Are Back to 'Normal': Poll – The Hill
- America Isn’t Headed Toward Lockdowns, Say White House Officials – Washington Post
- Justice Dept. Asks Court to Reinstate Biden’s Vaccination Policy for Businesses – Washington Post
- CVS, Walgreens and Walmart Fueled Opioid Crisis, Jury Finds – New York Times
Views and Analysis
- President Biden’s Oil-Price Two-Step Won’t Lower Your Gas Prices – Washington Post Editorial Board
- The Non-solution to High Gas Prices Every President Is Drawn To – Paul Waldman, Washington Post
- Spending as if the Future Matters – Paul Krugman, New York Times
- Why the Senate Should Kill the Build Back Better Bill – Stephen Moore, The Hill
- The Democrats’ Last Chance to Make Build Back Better Better – David Dayen, American Prospect
- The Democratic Brand Is Broken. The Infrastructure Bill Isn’t Fixing It – David Siders, Politico
- Joe Biden’s Travails and the Deep Roots of Liberal Despair – Greg Sargent, Washington Post
- Biden: Don’t Repeat Jimmy Carter’s Catastrophic Mistake on Inflation – Jeff Faux, American Prospect
- How Softies Seized the Fed – Paul Krugman, New York Times
- Liberal Economists Got the Memo: Build Back Better Couldn't Possibly Worsen Inflation – Merrill Matthews, The Hill
- A Better Way to Tax Corporations Than the House’s Book Minimum Levy – Howard Gleckman, Tax Policy Center
- Why Is It So Hard to Get a Rapid Covid Test in the US? – Therese Raphael, Bloomberg
- Patients Now See Their Records, But Can They Understand Them? – Eliana Perrin, Bloomberg
- As Some Protest Life-Saving Vaccines, the Covid Threat Marches On – Eugene Robinson, Washington Post