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Gasoline Prices at Multiyear High; Biden Scrambles to Lower Cost

Gasoline prices are the highest they've been in a decade as demand outpaces supply of crude.
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Gasoline prices have consistently risen since the start of the Covid-19 pandemic, with the price in dollars per gallon reaching pre-Great Recession levels in recent weeks. 

In the U.S., gasoline prices ended December at $3.41 a gallon, according to the U.S. Energy Information Administration. The last time prices were this high was 2011.

U.S. citizens on the West Coast and in the Northeast are paying the most on average, according to the AAA. Meanwhile, Americans in the South and Midwest are paying the least on average. 

U.S. Gas Prices Chart

What Can President Biden Do About Gas Prices?

President Joe Biden released oil from the Strategic Petroleum Reserve in November while also asking China, India, Japan and South Korea to join in releasing their reserves to combat rising prices and fear of inflation. 

"Tools continue to remain on the table for us to address prices. This is something the administration is continuing to watch and monitor very closely," a White House official told CNN.

Last fall, nearly a dozen congressional Democrats asked Biden to ban U.S. oil experts amid the jump in prices. The administration pushed back against that idea, however. Energy consultant McNally said that the idea would be "poison."

Last week, China agreed and will release national strategic stockpiles around the Lunar New Year holidays, which begin on Feb. 1, sources told Reuters

What's Causing High Gas Prices?

The simple economics of high demand and low supply are driving gas prices higher. 

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As the worst of the Covid-19 pandemic seems to be behind us, demand has jumped. At the same time, OPEC has constrained its output to push up prices. 

In December, the oil-production group agreed to increase output by some 400,000 barrels a day after Biden called for increasing supply. 

Meanwhile, in Europe countries are seeing increased prices for natural gas and electricity as Russia, a key provider of natural gas to Europe, has kept supplies tight.  

OPEC's role in climbing gas prices is key as the group is the only entity with the supply to bring prices down. 

Biden Pulled in Two Directions

In the meantime, the Biden administration has pressured the National Petroleum Council to increase production to meet demand. 

Biden could make nice with the oil industry, but big oil was the target of many barbs from the president in the runup to the 2020 election. 

Biden's plan to make the U.S. carbon neutral is also a direct challenge to the oil industry. 

The administration has unveiled plans to build 500,000 electric-vehicle-charging stations in the U.S. as part of the $1 trillion infrastructure law signed in November. 

The law authorizes $5 billion in federal money to build the network and another $2.5 billion for local grants.