Democrats blame ‘price gouging’ for high gas prices; experts disagree

Democrats have rolled out a new messaging strategy on why costs at the pump continue to rise: price gouging.

With inflation at its highest level in four decades and the war in Ukraine threatening even higher gasoline prices, Democratic leaders are increasingly leaning into the notion that price gouging is the culprit.

“The bottom line is this: The real problem with increased gas prices is gouging and monopolies,” Senate Majority Leader Charles E. Schumer, New York Democrat, told reporters this week. “You’re going to hear a lot more from us on those issues in the near, near future.”

The charge offers Democrats some cover from voters’ anger over inflation in a tough election year, but there is no evidence that U.S. oil and gasoline companies have banded together to excessively raise prices and take a bigger bite out of Americans’ pocketbooks.

Rather, energy market strategists have long warned that inflation and supply issues would create a volatile global market and could cause gasoline prices to far exceed $5 per gallon. The national average for a gallon of regular gasoline was $3.73 as of Thursday, according to AAA. That’s an increase of more than 30 cents from a month ago and roughly $1 from a year ago.

And the decision by Russia, a major global exporter of natural gas and oil, to invade Ukraine has only made matters worse.

Oil prices on Wednesday hit their highest levels in years. Brent Crude futures, the global standard, was above $116 per barrel, the highest since 2013. WTI crude, the U.S. standard, was roughly $113 per barrel, the highest in more than a decade. 

“We have not heard of any inquiries or complaints from any of our members regarding gas price gouging,” said AAA Public and Government Affairs Manager Ragina Ali. She added that price gouging for gasoline most frequently occurs around natural disasters, such as hurricanes.

In recent weeks, President Biden has pinned the rising inflation for groceries and energy on price gouging. As evidence, the White House pointed to some public companies that have instituted price hikes despite reporting profit increases.

Mark Finley, a fellow in energy and global oil at Rice University’s Baker Institute for Public Policy, said the administration has sent mixed messages to the energy industry.

“Energy Secretary [Jennifer] Granholm and the president have both said things to the effect of, yes, we want U.S. oil and gas companies to invest more in domestic production,” Mr. Finley said. “At the same time, the administration is hectoring the industry over windfall profits and price gouging, even though historically investigations by the FTC into price gouging don’t really turn anything up.”

Mr. Biden again leaned into the notion that widespread price gouging was occurring during his State of the Union address this week. He said that companies were unfairly raising prices amid the pandemic and that he was “announcing a crackdown on these companies overcharging American businesses and consumers.” Mr. Biden also argued that combating climate change was a solution to mitigate gasoline costs. 

But the party has only recently ramped up its use of the term when talking about ways to lower soaring prices at the pump.

“I think it’s completely reasonable to make sure that when people are feeling higher prices, that there be a legitimate market-driven reason,” said Rep. Sean Maloney, New York Democrat and chair of the House campaign arm tasked with reelecting vulnerable members. “None of us knows the facts in any individual case, but I want federal regulators to be making damn sure that there isn’t 1 cent of collusion behind rising gas prices.”

If Democrats are looking for something — or someone — to blame, target Russian President Vladimir Putin, suggested Republican strategist Rick Tyler.

“If he can unite the American people against Russia and then blame all of America’s domestic problems on the fact that we’re helping to preserve democracy in Ukraine and defeat Russia, I think that’s a winning political message,” Mr. Tyler said.

Rob Underwood, a lobbyist and president of Energy Marketers of America, characterized the idea of price gouging at the pump as “nonsense.” He contended that “whiplash” from Russia and a myriad of factors, including the location of gas stations and the cost of crude oil, are the real culprits.

“Crude oil is traded in a global market where prices are ultimately set by worldwide supply and demand and influenced by Wall Street commodity traders’ perceptions about future supply and demand,” Mr. Underwood said.

• Valerie Richardson contributed to this report.