(Casey Harper, The Center Square) The ongoing conflict in the Middle East could lead to a spike in gas prices in the U.S. after President Joe Biden drastically curtailed U.S energy independence and sold much of the nation’s emergency reserve supply to China while squandering the rest ahead of the midterm election to keep prices low.
Oil prices have already signaled a surge in response to the major conflict between Israel and Hamas terrorists in Gaza, which could drag other nearby oil-producing nations into the fight.
“The conflict will almost certainly drive up gas prices, but much will depend on its scope and duration,” Paige Lambermont, an energy expert at the Competitive Enterprise Institute, told the Center Square.
“This uncertainty itself can drive up prices,” she added. “But there is one thing that is certain: Increasing the oil supply would mitigate any price effects connected to the conflict and would help to reduce the extremely high gas prices that Americans were already dealing with when they go to the pumps.”
Thus far, Biden has refused to budge on any additional energy exploration despite having already drawn the U.S. into a proxy war with Russia over its territorial dispute with Ukraine.
Indeed, rather than pursue additional drilling options, the leftist leader recently canceled an existing oil lease in Alaska.
Oil prices have fluctuated in the days since the attack, but overall there was an initial spike in crude oil futures of roughly 4-5% that has so far leveled off.
Gas prices surged in the U.S. in the summer of 2022, hitting a national average of $5 per gallon of regular gas in part because of the Russian invasion of Ukraine.
To combat those higher prices, Biden released tens of millions of barrels of oil from the Strategic Petroleum Oil Reserve, the nation’s stockpiles normally reserved in case of emergencies.
According to the federal Energy Information Administration, that reserve has been nearly cut in half since 2020.
At the onset of the COVID-19 pandemic, then-President Donald Trump sought to boost the reserves. However, his effort to refill it was ultimately blocked by Democrats.
After Biden began releasing the supplies with reckless abandon to offset his own short-sighted energy policies and the resulting inflation, they dipped to the lowest levels since the early 1980s, when then-President Ronald Reagan worked to build them up.
Biden took fire from critics for releasing the oil shortly before the 2022 midterm elections, where Democrats feared voters would punish them for the Biden economy with a red wave in Congress.
Although his strategy may have helped politically in stemming the losses, many warned that lowering the stockpile so dramatically could leave the U.S. vulnerable in case of a large-scale conflict.
Now that a conflict may be on the horizon and Middle East oil supplies are even more volatile, that criticism has resurfaced, and is likely to play a significat part in the 2024 presidential election.
“How high will oil prices go?” tweeted Peter St. Onge, an economist at the Heritage Foundation.
“Goldman and Bloomberg are already calling $100 oil. Some are saying $150 if Iran gets involved. Joe Biden broke all the easy solutions after he drained the Strategic Petroleum Reserve to just 17 days. Then burned the Saudis over and over, who may be in no mood to help.”
Lambermont said these and other policies have left the U.S. unprepared for global shocks.
“Unfortunately, the Biden administration has long been pushing policies that reduce the oil supply,” she told the Center Square. “Just in the last several weeks, the administration canceled seven oil and gas lease sales in the Arctic National Wildlife Refuge, proposed a new rule to impose an outright ban on oil and gas leasing in the National Petroleum Reserve-Alaska, and released an offshore oil and gas lease sale plan that the administration boasts would have ‘the fewest oil and gas lease sales in history.'”
As the Center Square previously reported, Hamas terrorists fired thousands of missiles into Israel over the weekend, and militants spread throughout the country, killing and capturing both soldiers and civilians. The casualty numbers are still in flux, but hundreds of Israelis were killed and even more injured.
Israel quickly fired back, launching strikes in Gaza and declaring war, promising unparalleled retribution for the attacks. The conflict, which is likely to escalate and continue for at least the rest of this year, has raised questions about the U.S. financial and military aid to Israel as well as how oil markets will be impacted.
“Historically, any tensions in the Middle East cause market volatility, and I don’t see this being any different especially if Israel takes direct action against Iran,” said Daniel Turner, executive director of the energy workers advocacy group, Power the Future.
“The Iranian regime feels particularly empowered right now,” he added. They see Carter-esque weakness in the White House and have built strong alliances with China and Russia.”
According to AAA, the national average price for a gallon of regular gasoline is $3.66.
“Despite sanctions and international pressure, many of our adversaries never stopped producing and selling oil, and now they are cash rich and emboldened,” Turner said. “Higher oil prices are better for them and will likely result from inevitable escalating violence in the region.”
For now, experts say the impact on prices will largely depend on the length of the conflict and which world powers get involved.
“Prices at the pump are sensitive to world oil markets because the cost of crude oil is set at the global level and makes up more than half the cost of refined gasoline in the United States, on average,” said Travis Fisher, an economist at the Cato Institute.
“Any upticks in crude oil prices tend to translate to increases in gasoline prices,” he added. “For now, the price increases in global crude oil markets appear modest, but that could change if the conflict widens.”
Headline USA’s Ben Sellers contributed to this report.
