Will Biden’s Withdrawal Impact Gas Prices — And If So, How?
President Joe Biden decision to withdraw as the Democratic nominee for the 2024 Presidential election will undoubtedly have far-reaching implications for the U.S. economy, world politics and, in turn, the average American wallet.
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One point of curiosity has been the impact of gas prices following Biden’s withdrawal. So far, this summer, fuel prices at the pump have been declining, according to AAA statistics. Average gas prices fell four cents per gallon from July 15 – 18, 2024. Prices at the pump are up 5 cents from this time last month, but 9 cents lower than this time last year. AAA experts are attributing the lower prices to reduced demand because of the heatwave sweeping much of the country.
“The arrival of summer used to signal the start of a robust driving season, but that has not been the case recently,” said Andrew Gross, AAA spokesperson, in a blog post. “We know that a record number of travelers were forecast to hit the highways for the July 4th holiday, but since then, they appear to be staying off the road, and the recent scorching heat is possibly to blame. Maybe things will pick up soon.”
Patrick De Haan,Head of Petroleum Analysis, GasBuddy, agreed that the weather may have more effect on gas prices than what’s going on in Washington. “Prices rise and fall seasonally and a lot of other things like hurricane season could make an impact, but a President can’t really impact the balance of supply and demand in a meaningful way in short order,” De Haan told GOBankingRates in an email interview.
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Could Political Uncertainty Lead to Rising Gas Prices?
However, other finance experts disagree. Justin Godur, founder of Capital Max, a startup that provides advisory services and real estate financing, said, “Political uncertainty often leads to volatility in commodity prices, including gas. Investors might anticipate changes in regulatory policies, leading to fluctuations in oil futures. This uncertainty could cause a temporary spike in gas prices as the market reacts to the news and adjusts to the potential for new leadership and policy directions.”
So far, as of Monday afternoon, the day after Biden’s withdrawal from the election, gas prices haven’t shown any indication of a spike. The downward market trend continues. Crude oil prices fell to the lowest they have been in more than a month, according to a Reuters report, with Brent crude falling 47 cents since June 11, 2024, and the U.S. West Texas Intermediate crude futures dropping by 34 cents.
The downward trend could continue if consumer confidence drops following Biden’s withdrawal. “Consumer confidence is crucial, as it affects spending behaviors, including fuel consumption,” Godur said.
However, if consumer confidence rises with the prospect of Vice President Kamala Harris, the presumptive Democratic candidate endorsed by Biden, beating Republican candidate Donald Trump — and the heat wave breaks encouraging more people to travel in August — gas prices could show their typical summer increase.
“Presidents have extremely limited ability to influence oil and gas prices already, so something as simple as a withdrawal is literally just a blip for energy markets,” De Haan said.
Long-Term Outlook
In the long term, Godur said, the policies of the favored candidates could affect gas prices.
“Pre-election, gas prices will be shaped by campaign promises and perceived policy impacts,” he said. “If candidates propose policies that favor oil production, such as easing drilling restrictions or offering incentives for domestic production, we might see a stabilization or even a decrease in gas prices as the market anticipates increased supply. Conversely, candidates pushing for aggressive climate change measures could lead to concerns about restricted supply, driving prices higher.”
However, De Haan is quick to point out that so many other factors, including state and local taxes, have a much greater impact on gas prices. “Politics have a very limited effect,” he said. “Policy can steer us down a different path, but it takes years for some policies to deliver meaningful difference.”
If Harris is elected as president and continues with President Biden’s emphasis on a shift toward green energy and electric vehicles, gas prices could rise, Godur speculated.
“If candidates propose policies that favor oil production, such as easing drilling restrictions or offering incentives for domestic production, we might see a stabilization or even a decrease in gas prices as the market anticipates increased supply. Conversely, candidates pushing for aggressive climate change measures could lead to concerns about restricted supply, driving prices higher.”
De Haan, however, noted that there are more important factors at play that will affect gas prices between now and November — and beyond. “Most Americans vastly overestimate the power a U.S. president has over a global commodity,” De Haan said.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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