As oil prices continue to spike, the White House and the oil industry have been engaged in tit-for-tat all week about whether more can be done to ramp up domestic energy supplies.
The industry and many of its largely Republican allies in Washington have criticized the White House over what they say are onerous regulations, a slow permitting process, and President Biden’s revocation of the Keystone XL pipeline permit.
In response, the White House said that the pipeline would still be under construction today even if its construction hadn’t been stopped. They also noted that there are thousands of outstanding permits that oil companies have left unused, suggesting companies are profiteering from the high prices.
In an interview with Yahoo Finance on Thursday, a key Biden aide pointed even more directly at the oil companies. “There is definitely some of that going on,” Jared Bernstein said when asked about possible profiteering, before adding that now is the time when “the companies very much have to step up.”
President Biden speaks announces a full ban on imports of Russian oil and energy products n March 8. (Win McNamee/Getty Images)
A longtime Biden economic adviser, Bernstein previously worked as the chief economist to then–Vice President Biden. Now he is one of three members on the president’s influential Council of Economic Advisers.
The heightened rhetoric comes amid a surge in energy prices — a key driver of the February inflation numbers released Thursday. Overall prices rose 0.8% in February, while the energy index jumped 3.5%, the largest monthly rise since October.
‘Gas prices are going up more quickly than the usual lag’
Bernstein told Yahoo Finance that some of the rising prices are the result of Russia’s invasion of Ukraine, and that even higher prices could be on the horizon. Actions such as the release of 60 million barrels from U.S strategic reserves could serve as a temporary measure to lower prices, he said.
Oil and gas companies need to respond to rapidly rising prices, he said. “These price signals are very strong,” he said. “And to the extent that they’re not doing so, to the extent that gas prices are going up more quickly than the usual lag between oil and gas, we’re going to be watching that very, very closely.”
Questions about corporate “price gouging” have grown among White House allies. Some have claimed that price gouging is “widespread,” though White House officials have not said so in so many words. What Biden and his aides have done, however, is callout specific instances of price hikes, citing industries including meatpackers, energy firms, and companies involved in the supply chain.
In his statement Thursday about inflation, Biden noted, “I’m promoting competition to make sure big corporations are offering consumers fair prices”
‘Putin’s price hike’
Republicans and those in the energy industry point the finger at Biden for the spike in energy prices, particularly for revoking the Keystone pipeline permit.
During a separate Yahoo Finance interview Thursday, ICAP Founder Jay Hatfield said, “One of the dynamics that investors don’t appreciate is when the Biden administration canceled the Keystone Pipeline, they essentially canceled all pipelines because you really need the federal government to support pipelines because there’s tremendous local opposition.”
A host of Republicans have called on Biden to rethink his Keystone decision. A recent letter from Republican Senators said that “opening up American oil and gas deposits, and in particular approving the Keystone XL Pipeline, would benefit our allies suffering under Russian tyranny and American consumers facing steadily increasing prices at the pump.”
So far, the White House has batted away such suggestions. On Wednesday, Press Secretary Jen Psaki said restarting Keystone “does not address any problem,” saying the U.S. is already getting the oil that Keystone would have delivered. “The pipeline is just the delivery mechanism, it is not an oil field,” she said during her daily briefing with reporters.
A common refrain among Biden and his supporters deflects any blame for rising prices, calling this week’s record inflation numbers, “Putin’s price hike.”
Regardless of who or what is responsible for rising oil prices, strategist Andy Lipow told Yahoo Finance that increasing U.S. oil output is not “like a Fed Ex overnight delivery” and will take time.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.