Everyone in America is aware (with the exception of the 500 plus politicians in Washington, D.C.) that gasoline prices have increased. In most places in this country, it is in the 50% range within the last 11 months. The higher prices have resulted in the economic crisis, as it has raised prices in shipping, delivery, food and almost everything.
At first, the Biden administration denied prices were rising, then blamed the Organization of the Petroleum Exporting Countries (OPEC), and most recently accusing oil companies of conspiring to raise gasoline prices.

Biden’s answer now is releasing of 50 million barrels of oil from the Strategic Petroleum Reserve (SPR), which is only about two and one-half days consumption of the U.S., as we consume around 20 million barrels daily. His other solution is blaming American’s for not buying electric vehicles (EVs). By the way, the 50 million barrels is only around five hours of world consumption.

Another problem is the oil won’t be released all at once. Some of it may even be shipped overseas, which has happened in previous releases. And, the reserves released will be “sour” crude, heavier and more expensive to process than the lighter, “sweet” crudes refineries prefer.

Ultimately, the SPR release is likely to have a negligible impact on U.S. gasoline prices over the months ahead. That is why the Biden administration’s other current strategy is to blame the public for not buying EVs.

The Biden administration has been begging OPEC to produce more oil, while blaming them for the price increases. Needless to say, OPEC has not enjoyed the administration’s blame. OPEC member Saudia Arabia, which accounts for one-third of all OPEC production, and Russia, have announced they are considering pausing any production increases.

President Joe Biden visited a General Motors plant in November, that is manufacturing an all-electric Hummer pick-up, which GM will sell for $112,595. The president crowed, consumers could save “$800-$1000 in fuel costs this year,” if they purchased the EV.  Just this past Sunday, Transportation Secretary Pete Buttigieg argued that rural consumers should buy EVs because they drive the most.

Most Americans can’t afford to spend $112,595 for a new car, EV or not. That is a big problem with EVs, they cost a lot more than the internal combustion ones. The average price of EVs sold in May was $11,000 more than the average price of all other cars and light trucks, according to a recent report by Kelly Blue Book.

That average EV price was driven by Tesla sales, which accounted for 60% of all EV sales through September 30 this year. The majority of EV buyers are wealthy, with household incomes greater than $100,000 per year.

Buttigieg’s ignorance is flowing as freely as a broken fuel line when he admonishes rural consumers to buy EVs, as they have lower incomes than urban consumers, rely on pickup trucks for hauling animals, feed, and heavy equipment. But the fact there aren’t any electric pickups for sale yet, and the even bigger problem, EV charging stations are not available in most rural areas, are just inconvenient details for Buttigieg. 

The administration’s legally dubious proposal for even more lavish subsidies, $12,500 for EVs that are “union made” while continuing the existing $7,500 subsidies for all other EVs, is very unlikely to lower prices. Actually, these EV subsidies provide a convenient umbrella for manufacturers to raise their prices. Tesla, for example has raised the prices on its Model 3 and Model Y three times this year.

In reality, the scale of the U.S. automobile market means that a transition to EVs is far in the future, if ever. There were around 270 million cars and light trucks registered in the United States last year.  And last year, about 14.5 million new cars and truck were sold, with about 250,000, or 2% of those were EVs, mostly Tesla’s. Even if EV sales increase, it will take decades to replace the existing stock of internal combustion vehicles.

Even if that transition occurs, the electricity needed to power those EVs will be staggering. Transportation accounts for one-fourth of all U.S. energy consumption, most of which is gasoline. Believing that all of that energy can be replaced with electricity, and only electricity from green sources like wind and solar, is magical thinking, or just plain stupidity.

The admonishing of Americans, many of whom live paycheck-to-paycheck, that they could avoid the economic harm of higher gasoline prices by buying high-cost EVs is a shameful and arrogant response to a problem the Biden administration has caused by restricting crude oil supplies and production. Just 11 months ago we were energy independent under Trump’s administration.

Sadly, arrogance and stupidity of the Biden administration appears to be their go-to strategy on energy policy.

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