Why Trump suddenly sounds a lot like Biden on gas prices
By Chris Isidore, CNN
(CNN) — President Donald Trump says “Big Oil” companies are keeping gas prices artificially high, echoing a complaint former President Joe Biden made during the last gas price spike. But, unlike Biden, Trump says he wants the Justice Department to investigate.
In a Truth Social post early Wednesday, Trump argued that prices at the pump are not falling quickly enough, despite the drop in oil prices.
“The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil,” he said. “Those prices are dropping like a rock! In other words, customers are being ‘gouged.’ I have instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I’m seeing!”
If that sounds somewhat familiar, it’s because it is.
Biden posted a similar complaint back in 2022 when Russia’s invasion of Ukraine sent energy prices soaring.
“Oil prices are decreasing, gas prices should too,” said his post in March of 2022, when prices were climbing towards a record high. “Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31. Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.”
The challenge for Trump, and for Biden back in 2022, is that retail gas prices aren’t set by “Big Oil.” They are set by tens of thousands of gas station owners, which are small, independent businesses who base their prices largely on the wholesale cost of gasoline.
And oil and wholesale gas prices also aren’t directly set by oil companies. They are mostly set by global commodity markets. That is why even though relatively little Russian oil in 2022 or oil from the Persian Gulf was making it into American gas tanks this year, the disruptions in the oil and gasoline markets still affect prices in the United States.
Trump is correct that retail gas prices have been slow to come down. But that is a longstanding feature of the market, not necessarily evidence of price gouging.
Gas station owners saw their profits squeezed by wholesale prices that shot up during the early months of the war in Iran. Some even sold fuel at a loss in order to avoid pricing their gas higher than competitors who had purchased wholesale gas at lower prices a few days earlier.
When wholesales prices start to fall, retailers are often slow to cut their pump prices. They have to cover the higher prices they already paid for inventory purchased at higher costs. and are also trying to recoup some of the money they lost when prices were climbing.
That’s one major reason why the industry has long described gas prices as “going up like a rocket and coming down like a feather.” In other words, prices don’t drop like a rock, as Trump (and consumers) would like. It’s not a conspiracy. It’s economics.
But blaming “Big Oil” for the pain that people are seeing at the pump is a lot easier than explaining the complexities of global commodity trading or local station pricing practices.
Trump is not the first president to point the finger when gas prices become a political problem. And he likely won’t be the last.
The-CNN-Wire
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