Old North News

Over the holiday weekend, President Joe Biden wrote a controversial tweet blaming oil companies for high pump prices. Many have pointed out that this message displays a deep misunderstanding of the nation's private economy and the Wall Street Journal (WSJ) Editorial Board points out that large refineries own only a very small portion of gas stations in the country.

On July 2, Biden published a tweet ordering gas stations to lower their prices: "My message to the companies running gas stations and setting prices at the pump is simple: This is a time of war and global peril. Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now."

"It’s embarrassing for the leader of the free world to sound like he’s channeling Hugo Chávez," The Wall Street Editorial Board said.

The board claims the president's tweet "betrayed a willful ignorance about the private economy," since large oil refiners "own fewer than 5% of all gas stations in America." More than 60% of single stores are reportedly operated by individual families, with the rest being independently owned and operated by chains or grocery stores selling fuel.

The Journal Editorial Board said a majority of gas stations make only a few cents a gallon in profit, staying in business mainly by selling food and cigarettes. The National Association of Convenience Stores reports its members to be struggling this year because customers are making fewer stops and buying less amid high pump prices. If retailers were to sell fuel at cost, most would likely go out of business.

As a result of thin profit margins, a large amount of refiners exited the retail business in the 2000s. According to the WSJ, the Energy Information Administration (EIA) said distribution and marketing made up approximately 5% of the price of gasoline in May, or about 22 cents per gallon. This reportedly covers the cost of freight, labor, utilities, real estate and credit-card fees.

Biden's most recent display of economic ignorance isn’t a one-off, as the WSJ Editorial Board points out. Rather, the president has repeatedly "accused oil and gas companies of price gouging and demanded that they increase production even while his administration threatens to put them out of business" in recent months. The Editorial Board said Biden continues to be ignorant about the fact that "businesses make long-term decisions based on demand expectations and policy signals."

North Carolina's gas average as of July 5 was $4.44 per gallon, according to the American Automobile Association. When compared to this time last year, the average American family in North Carolina is spending $963 more per year on gasoline alone, according to the latest data from the Gasoline Misery Index.