Prof. ST Hsieh
Director, US-China Energy Industry Forum
March 12, 2022
Voting date for the 2022 mid-term is scheduled for November 8, 2022, which is less than six-month away, but both parties are engaged already. As of now, Biden and the Democratic are on the defense. Historical trend has been against the incumbent, Biden led Democratic are in for a survival battle. COVID-19 pandemic is a once of lifetime crisis, Biden’s campaign promise of full control of the pandemic is being contested. Pandemic caused disruption supply chains, loss of human lives and productivities around the world already led to global recessions. Governments pumping cash into the market already led to inflation. Unfortunately, the Ukraine war has caused global energy price skyrocketing and inflations around the world. Biden administration is a key player of the Ukraine war and the resulted seemingly unstoppable gasoline price hike in the US. The Republican party naturally seizes the opportunity to attack Democratic party, it is almost sure that Republican party will be able to re-take majority control of the Senate and/or the House.
It is not clear how the Republican party, after the mid-term election, can work with Biden in the White House for controlling inflation and tame the rise of gasoline price. But the political polarization in the US will get much worse before it gets any better. Just remember, the US general election is scheduled for November 2024. The 2022 mid-term election is a pre-season warm up game for the 2024 general election.
Republicans seize on rising gas prices amid Ukraine conflict
Republicans running in down-ballot races are using soaring gas prices to go on the offensive against Democrats, posing a challenge for President Biden and his allies on the campaign trail.
Biden and Democrats were already contending with record inflation and rising gas prices well before the Russian invasion of Ukraine, but Republicans have used the latest price hike to tie their opponents to what they argue is a lack of energy independence under the Biden administration.
On Thursday, the National Republican Congressional Committee (NRCC) released an ad titled “Pain at the Pump,” targeting 10 incumbent House Democrats.
“The blame for record-high gas prices lies solely at the feet of Joe Biden and House Democrats,” NRCC Chair Tom Emmer (R-Minn.) said in a statement announcing the ads.
For months, Republicans have been seeking to blame Biden and the Democrats for already high gasoline prices, though analysts largely attributed the high prices seen in recent months to supply and demand mismatches related to the coronavirus pandemic.
With Russia’s invasion of Ukraine driving gasoline prices even higher, the GOP has grown even more aggressive in seeking to pin the blame on Democratic climate policies.
Biden has sought to deflect the attacks.
“Make no mistake, inflation’s largely the fault of Putin,” the president said Friday in remarks to House Democrats, referring to Russian President Vladimir Putin.
“I love, you know, the Republicans saying it’s Biden’s gas pipeline, Biden’s said he’s going to stop the Keystone Pipeline and I did and that’s the reason prices went up. Folks let’s get something straight here, the Keystone Pipeline was two years away and had been 2 percent finished. Give me a break,” he added.
The Keystone XL pipeline was about 8 percent built when Biden revoked a key permit for it at the start of 2021, and the company behind it had said it was not expected for completion until 2023. The move has drawn criticism from Republicans, who point to it as an example of the policies they say are weakening the U.S.’s energy independence.
Gas prices reached a record $4.33 per gallon this week, surpassing the previous 2008 record of $4.10. Americans were dealt another tough inflation report this week, which showed that consumer prices rose 0.8 percent in February and 7.9 percent over the last 12 months. Biden reacted to the report by calling it the impacts of “Putin’s price hike.”
“We’ve seen the price of gas go up at least 75 cents since President Putin lined up troops on the border of Ukraine,” said White House press secretary Jen Psaki said on Thursday when questioned by Fox News’s Peter Doocy about if the White House is going to “start blaming Putin for everything until the midterms.”
The White House also attempted to ease American concerns this week by arguing that high gas prices will be temporary. Republicans running for election are brushing off this narrative, noting that inflation and gas prices were on the rise well before Russia’s invasion.
“We have seen an overregulation from this administration on the oil and gas industry for the past fifteen months, and now blaming it on Vladimir Putin seems awkwardly convenient,” said Wesley Hunt, a Republican running in Texas’s 38th Congressional District.
The newly drawn district makes up much of the Houston area, which has been nicknamed “the energy capital of the world.” Hunt pointed out that the vast majority of his would-be constituents are especially feeling the pinch of higher gas prices due to the district’s ties to the energy sector.
“We’ve been living this nightmare for the past year and now we know better,” he said.
Biden on Thursday argued that the U.S. is increasing oil production with record productivity and that oil production will be higher this year than in recent previous years.
“The Republicans are playing a game here,” the president said on the GOP messaging.
Analysts say that Russia, rather than Biden, is to blame for the latest spike in gasoline prices.
Claudio Galimberti, senior vice president of analysis at energy research firm Rystad Energy, said that suddenly, following the invasion, the approximately 4 million barrels of oil that Russia supplies daily to the global market have become hard to place, resulting in a “supply shock.”
“We are in a shock because we need to find these barrels somewhere else,” he said.
Before the invasion, high gas prices were largely attributable to supply and demand mismatches because of the coronavirus pandemic.
“There’s a lot of damage that was inflicted by COVID and now Russia on top of that kind of further spreading the gap between supply and demand,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
Democrats, including those in swing states, are seeing this as an important issue for their constituents.
“It’s a big problem for my constituents and Americans. Not only the price of gas, which is a big deal, but the price of groceries as well,” Sen. Mark Kelly (D-Ariz.), who is facing a closely watched reelection bid, told The Hill.
Kelly has proposed a suspension of the federal gas tax to provide some price relief — but the measure faces an uphill battle in Congress.
Asked what else should be done, the senator said, “Call on the administration to — let’s look for options to increase production, and we should be calling on oil companies to increase production.”
Wisconsin Democratic Senate candidate Tom Nelson, a progressive, praised Biden’s moves against Russia, but called for a renewable energy strategy going forward.
“How many times are we going to get smacked in the face?” Nelson told The Hill. “We need to have an energy strategy that moves beyond fossil fuels.”
“That’s a big reason why I support the Green New Deal because it’s a matter of energy security, national security, and global security,” he added.
Biden and down-ballot Democrats face an uphill battle going into the midterms. A Wall Street Journal poll released on Friday found that only 42 percent of respondents said they approved of Biden’s job performance. On top of that, 63 percent of voters said they disapproved of how Biden has handled inflation. Forty-seven percent said they believed Republicans were better situated to handle inflation, while 30 percent said the same about Democrats.
Democratic Party officials have acknowledged rising prices at the pump but are also accusing Republicans of politicizing the issue.
“Republicans are only looking for political talking points,” said Democratic National Committee Chairman Jaime Harrison. “They don’t care about the impact on the pocketbooks of people. They don’t care about the difficulties that it presents. Democrats are looking for solutions.”
Democratic strategist Jon Reinish said that Democrats should be able to fight back against the messaging from the right.
“Show voters all that Democrats are trying to do to ease pain at the pump,” he said. “Show them everything Republicans are not doing, and have never done and how cynically they’re trying to use the issue as a political football instead of actually trying to address the problem.”
He added that with Russia’s invasion of Ukraine, Democrats may actually be in a better position on high gasoline prices than they were previously.
“There’s a more unifying and tangible explanation for the most recent spike that Americans can automatically understand,” he said.
The Memo: Biden, Democrats feel new political pain on inflation
© AP-Patrick Semansky
President Biden got a fresh jolt of political pain on Thursday with the release of new data showing inflation reaching a 40-year high of 7.9 percent.
The startling figure was a reminder, even amid the international crisis sparked by Russia’s invasion of Ukraine, that the fate of Democrats in this November’s midterm elections will be decided by issues close to home.
If Democrats lose control of Congress, Biden will be tightly constrained for the last two years of his first term.
When it comes to inflation, Republicans blame Biden’s earlier spending measures, including the $1.9 trillion COVID-19 relief package passed a year ago, for overheating the economy.
The steep rise in gas prices that has accompanied the early stages of the war in Ukraine gives new urgency to the issue.
Even though Republicans don’t want to seem gleeful about economic problems, they have no doubt that the soaring cost of living gives them a big advantage in the midterms.
“Elections come down to kitchen-table issues,” said Matt Gorman, a GOP strategist and former communications director of the National Republican Congressional Committee.
Alluding to Virginia Gov. Glenn Youngkin’s (R) victory over Democrat Terry McAuliffe last November, Gorman added, “We saw it in Virginia, we are going to see it in the midterms. Democrats can use every trick in the book to try to blame inflation on Vladimir Putin or on corporations. But it’s a problem that falls solely at the feet of Joe Biden.”
Democrats fiercely contest that idea.
They say that inflation was stoked last year by the once-in-a-lifetime circumstances of a world in the grip of a global pandemic. Supply chains were snarled not because of any policy specific to Biden but because American consumers shifted toward spending more money on goods, and less on services such as restaurant meals or hotel stays.
In recent days, the White House’s message also shifted on gas prices and inflation generally, with Biden blaming “Putin’s price hike.”
There is no question that the war in Ukraine is having an inflationary effect, not just on gas prices but also on staples like bread. Russia is the world’s largest exporter of wheat, for example. Then there are the economic disruptions inherent to the raft of sanctions imposed on Russia.
It is hard to see how Biden could have taken effective action against Putin while avoiding these effects. There has been broad bipartisan support for the sanctions — and for the idea that the West cannot simply let Putin’s actions stand.
But whether that will save the political skin of Biden and the Democrats come November is an entirely different question, especially given that the president’s approval ratings were low before the conflict broke out in Ukraine.
Democrats are fighting the headwinds of history, given that a president’s party almost always loses seats in the first midterms of his tenure.
Add the highest inflation since 1982 on top of that and Democrats are bracing for a tough outcome.
“Look, I realize it is going to be challenging,” said Democratic strategist Julie Roginsky, citing the historical trends and the inflation figures. “It’s not unique to Joe Biden. Ronald Reagan faced the same kind of inflationary pressure in his first midterms and the Republicans did not fare well — no matter how popular he was two years later.”
Republicans lost a net 26 House seats and one Senate seat in the 1982 midterms. This year, Democrats are defending an extremely narrow House majority and a 50-50 Senate.
Biden has sought to persuade voters to look at the bright side of his economic record, which includes extremely robust job creation as the nation edges its way out of COVID-19.
In his Thursday statement on the new inflation numbers, Biden noted: “New unemployment claims remain low, as jobs are created at a record level. The rate of people on unemployment insurance is the lowest since 1970 – more than 50 years. And, private sector job growth is strong, boosted by the steps we took in the American Rescue Plan a year ago this week.”
But, worryingly for the president and his party, the effects of inflation in general and prices at the pump in particular, may trump all that.
A new Economist-YouGov poll this week indicated that 42 percent of Americans view the economy as “poor” in contrast to just 5 percent who describe it as “excellent” and 21 percent who call it “good.”
The same poll found a stark 85 percent of Americans describing inflation as a “very serious” or somewhat serious problem facing the nation.
Perhaps just as worryingly for Biden, 69 percent expect inflation to either stay the same or be even higher six months from now. Sentiments like that have the capacity to be self-fulfilling, prompting workers to push for wage rises which companies tend to pass on to consumers in higher prices — forcing the inflationary cycle still higher.
“For the average American, the feeling is: What did I do to deserve this, and why is this happening to me?” said Democratic strategist Hank Sheinkopf.
As if all that did not spell enough gloom for Democrats, there is one other, overarching problem with inflation.
The most effective lever to tame it — raising interest rates — is in the hands of the Federal Reserve and its chairman, Jerome Powell, rather than Biden. Exerting the right amount of pressure on that lever is also enormously hard. Leave interest rates too low for too long and inflation stays around; put rates up too high or too fast, and economic growth can crater.