Americans are feeling the impact of inflation on their wallets, especially at the pump.
The latest inflation data show a 6.2 percent year-over-year increase in consumer prices, the highest level of inflation recorded since 1990. Gas prices are seeing a particularly acute spike, rising roughly 49.6 percent over the last year. Suffice it to say consumers aren’t happy with such crushing increases in the costs of essentials, and concern over inflation is becoming a top political issue. So, it’s not surprising that politicians like Senator Elizabeth Warren are already twisting themselves in knots trying to deflect blame for rising prices.
In a recent MSNBC appearance, the progressive senator from Massachusetts argued that gas prices are rising not because of government-fueled inflation but simply due to corporate greed by oil companies like Chevron and Exxon.
“We know exactly what the oil companies pay attention to, what is their main number one priority: profit,” she said. “If this were just ordinary inflation, we might see prices go up. But prices at the pump have gone up, why? Well, let me give you a hint: Chevron, Exxon have doubled their profits.”
“This isn’t about inflation… this is about price-gouging for these guys,” Warren continued. “When we see prices go up we’re all concerned, and the Republicans want to come in and just try to hammer on one thing about this economy. But we’ve got to pay attention to the fact that folks like the oil companies say this is just another opportunity to make profits, and we need to call them out on that.”
Prices at the pump have gone up. Why? Because giant oil companies like @Chevron and @ExxonMobil enjoy doubling their profits. This isn’t about inflation. This is about price gouging for these guys & we need to call them out. pic.twitter.com/kxiQkC2tYa
— Elizabeth Warren (@SenWarren) November 20, 2021
Senator Warren’s attempt to pin the blame for rising gas prices on corporate greed makes little sense. Are companies “greedy” in the sense that they’re focused on increasing profits? Yes, absolutely. (Although that’s not actually a bad thing). But it does not in any way explain the current increase in gas prices that is hurting Americans.
Chevron and Exxon are no more or less greedy or profit-focused than they were last year. Or the year before that. Or 20 years ago. There’s simply no reason to believe that they suddenly became extra greedy this year, or something.
So, too, are we supposed to believe that gas companies are uniquely greedy or especially profit-obsessed? Surely the CEOs of massive companies in other sectors that haven’t seen as drastic price hikes, like food, are just as greedy. If corporate greed could really explain high gas prices, why wouldn’t all prices be skyrocketing from all corporations?
The true causes of high gas prices are complicated, and ultimately, prices are set by supply and demand—not by the whims of individual companies. (Otherwise, they’d always set them as high as they could. But other suppliers and customer demand keep companies’ prices in check). Today’s high gas prices are influenced by international market dynamics involving OPEC, supply chain issues created by government pandemic restrictions, federal policies restricting the energy sector, and the Federal Reserve’s rampant money-printing that is fueling widespread consumer price inflation. So, too, some of the current increase represents a correction after 2020, a year of lockdowns, which saw unusually low demand for gas and even negative oil prices at one point.
Ultimately, no one can perfectly explain the complex causes of rising gas prices or offer an easy fix. But I can say with certainty that despite Elizabeth Warren’s rhetoric, “corporate greed” is not at all to blame. The senator’s emotional demagoguery against oil companies is likely just a cynical effort to deflect blame away from the federal government in which she serves.
This article, Elizabeth Warren Just Blamed High Gas Prices on Corporate Greed. Here’s Why That Doesn’t Make Any Sense, was originally published by the Foundation for Economic Education and appears here with permission. Please support their mission.