Politicians have no shortage of purported solutions to a global energy crisis that is causing Americans to wince at the pump — but the painful reality, experts say, is neither President Biden nor Congress can do much about it.
Russia’s war with Ukraine stoked a globalized energy market that was already running hot and careening toward record high prices. To make matters worse, Mr. Biden’s ban on Russian energy imports creates an immediate deficit of some 700,000 barrels a day of oil to the U.S. that is expected to drive prices higher.
Americans have bristled at the record high prices for gasoline, but about 70% backed a ban on Russian energy imports, according to a poll this week.
“We have to sacrifice something because those people in Ukraine are sacrificing their lives,” said Richard Feser, a snowbird who was paying $4.30 a gallon to fill up his car in Camden County, Georgia, on his way back to Frederick, Maryland.
How long such sentiments last remains to be seen if high prices persist or rise past $5 a gallon, which is within the realm of possibilities.
Gasoline prices on Tuesday continued to set records. Unleaded regular fuel reached an average of $4.17 per gallon, up roughly 70 cents from a month ago. Oil markets were also up: WTI crude, the U.S. benchmark, rose to $124.5 per barrel, and Brent, the global standard, nearly reached $129.
With Republicans demanding more domestic oil production and Democrats wanting more clean energy and use of the nation’s oil reserves, the list of proposals from elected officials seems endless. But few, if any, would course-correct soaring gasoline prices, energy industry experts said.
“The U.S. and the government take oil completely for granted,” veteran oil markets strategist Dan Dicker said in an interview. “They want it there all the time with an endless supply and for cheap. Unfortunately, the markets don’t work like that.”
Lawmakers are not completely ignorant of that reality.
“I think there’s little Congress can do in the short run,” Sen. Christopher Murphy, Connecticut Democrat, told reporters at the Capitol. “You essentially have a war between one of the biggest [energy] markets for the world and one of the biggest gas stations for the world — Russia.”
Republicans have demanded that the Biden administration ramp up domestic oil production and change its decision to cancel the Keystone XL pipeline.
Those ideas might sound simple, but they’re not, Mr. Dicker said.
Most production comes from private companies on private land, leaving the government limited room to affect supply through changes in public land use. The bigger issue is that oil companies were shaken from the absence of federal support when prices were low, including under President Trump and extending into Mr. Biden’s tenure.
Oil prices tanked during the COVID-19 pandemic because of a plunge in demand. Now, after years of companies consolidating and taking measures to secure their finances, they cannot suddenly substantially increase output.
“It’s not like your grandma putting pears in mason jars in the basement and pulling them out when you need them,” Mr. Dicker said. “You have to continually make a profit; otherwise, you go broke or need to make more financing.”
He suggested offering oil companies incentives, such as cheap loans and expanded production and act as a financial wedge when prices moderate.
Although the White House has not signaled a willingness to cut deals with the energy industry, the administration has been in talks with companies about increasing output. Major efforts would likely take years and large investments.
Last year, the U.S. imported about 672,000 barrels of oil per day from Russia. That number will now be zero. The embargo was in response to bipartisan pressure as Congress prepared to approve an embargo and force a reluctant Mr. Biden to cut off Russian imports.
The White House has been in talks with foreign adversaries such as Venezuela, Iran and Saudi Arabia to fill the void. However, it would likely have minimal impact on forestalling an immediate price hike. Engaging with dictators also drew sharp criticism from Democrats as well as Republicans.
“We need to blow a hole in the Russian economy. We need to lower gas prices for American consumers. Everything should be on the table,” Rep. Sean Patrick Maloney, New York Democrat and chair of House Democrats’ campaign arm, said in an interview. “But I don’t support strengthening one dictator to hurt another. And I don’t think you’ll see us do that.”
European countries have declined to follow suit because of a heavier reliance on Russian energy, particularly natural gas. Although the U.S. could supply Europe with more natural gas, it would be costly because of the need to be transported as liquefied natural gas, or LNG.
The only tool Mr. Biden essentially has in his arsenal is releasing more barrels from the Strategic Petroleum Reserve. But that route, which the White House has taken twice in recent months, has minimal impact on prices.
Sen. Edward J. Markey, Massachusetts Democrat, urged Mr. Biden to rely more heavily on the emergency oil stash of nearly 600 million barrels.
“We can deploy 600,000 barrels a day for 1,000 days in a row,” he said. “That would send a very strong message to the markets.”
While the rough figures are correct, the intended outcome likely would not significantly sway prices because of the global nature of energy markets.
“Whatever you drop into the market moves both inside and outside the U.S. You can’t isolate it from a global energy market,” Mr. Dicker said. “Everyone is paying the same price, and it’s high. On the face, it sounds reasonable. The bottom line is, it’s not practical.”
• Susan Ferrechio contributed to this report.