Does the President Control Gas Prices?

Gas prices are a hot topic for U.S. presidents and their opponents, but the reality is that presidents have limited control over them. According to Patrick De Haan, head of petroleum analysis at GasBuddy, gas prices are influenced by supply and demand, as well as global events affecting the oil and gas supply chain. De Haan emphasized that gas is a global commodity, and expecting one president to control its price is unrealistic.

While presidents may not have direct control over gas prices, they can take actions to try to keep prices low. This includes increasing domestic energy output, managing oil and gas reserves, changing fuel export rules, and promoting the production of fuel-efficient vehicles. Let’s explore the levers available to the U.S. president, their limitations, and how they can impact gas prices, with recent examples from the Biden administration.

Presidents may not control how much voters pay at the pump, but that doesn’t stop them from trying to keep prices low. They might do that by increasing domestic energy output, managing domestic oil and gas reserves, changing fuel export rules or encouraging the production of more fuel-efficient vehicles.

Here’s a look at each of the levers available to the U.S. president, the limits of that power, how it affects gas prices and recent examples from the Biden administration.

What the president can do: Open drilling on federal land. The Bureau of Land Management is responsible for reviewing permit applications for new oil drilling by private companies.

Limitations: The president can’t force private companies to produce more oil. He can only encourage it by opening access to federal land and setting other industry-friendly federal policy.

Impact on gas prices: Crude oil prices are the single biggest contributor to the price drivers pay for gas, according to the U.S. Energy Information Administration. And increasing the supply of oil could lower its price, which subsequently lowers the price of gas. But because it’s a global commodity, oil prices are set by global market forces, and increasing production levels in the U.S. wouldn’t be the simple solution some politicians suggest.

While the U.S. is the top-producing country, its production levels are dwarfed by the combined output of the Organization of Petroleum Exporting Countries, which makes production decisions for all its 12 members. OPEC members collectively produce the most oil and hold, by far, the largest share of oil reserves in the world, giving it the greatest influence over oil prices worldwide.

For several reasons, the U.S. can’t operate independently from those global market forces, no matter how much oil it produces. Aged refineries aren’t built to handle the quality of crude oil produced in the U.S. That requires refineries to import lower-grade oil from other countries.

“A lot of our oil is being exported because refineries have finite capacity to refine it,” De Haan told BW in a phone interview.

Recent examples: The U.S. has been the world’s biggest oil producer since 2018, according to the U.S. Energy Information Administration. When he first took office, President Joe Biden temporarily stopped issuing new permits to companies looking to drill on federal lands. But eventually the number of permits approved by the Biden administration surpassed those issued by the Trump administration, according to news reports.

Here’s a look at how domestic oil output has increased over time.

What the president can do: The president can authorize selling barrels of crude oil or gas from the country’s reserves. The U.S. maintains reserves of crude oil and gasoline that can be built up and then spent down as a way to mitigate the kinds of disruptions in supply that would send gas prices soaring.

• The strategic petroleum reserve holds up to 714 million barrels of oil in underground salt caverns along the Gulf of Mexico.

• The Northeast Gasoline Supply Reserve was established in 2014 after damages caused by Hurricane Sandy two years earlier demonstrated the vulnerability of the region’s gas supplies. It held up to 1 million barrels of gas (and is being decommissioned).

Limitations: The reserves are finite and designed for use in an emergency.

Impact on prices: It’s a move that grabs headlines but its impact on prices can be small if the volume of oil or gas put into the market isn’t enough to make a significant or lasting impact, De Haan says.

Recent examples: The Biden administration has pulled on this lever in a couple of ways.

In March 2024, Congress mandated the sale of all 1 million barrels of gas — about 42 million gallons — from the Northeast Gasoline Supply Reserve as part of the process of closing down that reserve. The Biden administration timed the sale to boost the supply of gas and hold prices down ahead of the July 4 holiday travel. Keep in mind that 42 million gallons is just about 11% of the 376 million gallons of gas that Americans use each day.

In 2022, Biden authorized the sale of 180 million barrels of crude oil from the strategic petroleum reserve in an effort to offset the rise in oil prices instigated by Russia’s invasion of Ukraine. The move was effective in bringing down the price of gas. A U.S Department of Treasury analysis found that the sale, which coincided with other international oil reserve releases, helped bring gas prices down by up to 40 cents.

“President Biden’s release after oil prices surged likely cooled off the price of oil to some meaningful degree,” De Haan says. “It was a temporary impact. It’s probably negligible now.”

What the president can do: Limit the amount of fuel exported by U.S. companies.

Limitations: Without access to international markets, U.S. companies might cut production of oil and gas rather than flood the domestic market with cheap fuel.

A ban on exports, in place since the 1970s, was eliminated in 2015 via a budget item passed by Congressional Republicans and signed by President Barack Obama. That move jump-started U.S. oil production, De Haan says.

Impact on prices: The goal of this move would be to increase the local supply of oil and gas, which would pull down prices at the pump.

Recent examples: The Biden administration considered limiting fuel exports when prices were soaring in 2022, according to news reports. The idea was heavily opposed by industry groups. The administration didn’t follow through.

What the president can do: Enact policy that raises fuel efficiency standards for new cars and trucks sold in the U.S. These standards are largely designed to reduce greenhouse gas emissions, but can have price implications.

Limitations: Any impact these policies have on gas prices takes years to materialize as the auto industry adapts to changes in fuel efficiency standards. Unless consumers and the auto industry fully buy into the shift — so that it’s driven by the market instead of by compliance — progress could stall if a new president takes office and loosens standards.

Impact on prices: More fuel-efficient vehicles — including hybrid and electric vehicles — could help reduce demand for gas. Any permanent drop in demand for gas would spell big changes for the oil and gas industry, making the impact on prices hard to predict, De Haan says. Refineries might export more fuel to offset declines in domestic demand. But if demand falls far enough, it could lead oil and gas companies to close refineries. If production were to be cut too quickly, it could cause gas prices to rise.

Recent examples: In March 2024, the Biden administration increased fuel efficiency standards for cars and trucks that would effectively push the auto industry to produce more electric and hybrid vehicles. Biden’s goal is to see zero-emission cars and trucks make up half of all sales by 2030.

So far, EV sales are increasing but still only make up about 8% of new-car purchases, according to a July report by Cox Automotive. Meanwhile, automakers haven’t given up on their best-selling gas-guzzling trucks and SUVs. In one example, Ford announced in July it would invest $3 billion to expand production of its F-series “super duty” pickups to a plant in Canada.