Bidenomics: Is the ‘Putin price hike’ real?

Yahoo Finance's Rick Newman evaluates whether or not the 'Putin price hike' on gas prices is actually real.

Video Transcript

BRAD SMITH: Yahoo Finance's Rick Newman standing by. And Rick, the White House attempting to answer for rising gas prices in a new way. So what's the latest here?

RICK NEWMAN: The buzz phrase people are going to start hearing is Putin price hikes, the Putin price hike. So it's now Vladimir Putin's fault that oil and gas prices are going as high as they are. Biden started talking about this, this week. And you can kind of see the concerted effort, the talking points coming out of the White House, Biden's economic advisors, other people talking about what's happening in the economy. And Biden was very blunt. Earlier this week, he went to Texas, and somebody said, what can you do about rising gas prices? And he said not much right now. It's Russia's fault.

So if you look at it, it's true that the price hikes we've seen, let's say, during the last three weeks clearly related to the big spike in oil prices that happened after Russia invaded Ukraine on February 24. But of course, we saw a lot of inflation in oil and gas prices and in other types of energy before the Russian invasion of Ukraine, before markets had priced that in. So as with many things that politicians say, Biden is partly correct, but partly not right on this one.

BRAD SMITH: And so Rick, while we have you, this comes at a time where we've been monitoring extremely closely over the course of this crisis where the president's approval rating has been and where this attempt by the White House to kind of reposition the story, where that will either help them out or be more detrimental in their future.

RICK NEWMAN: Well, his approval rating has ticked up a couple of points. It bottomed out at about 41%. That is very low, and I don't think it's at all surprising. You can point to a low unemployment rate and other things that are going right, but it's just that when you look at inflation that is now almost 8%, 7.9%, and possibly going higher, that's just-- I mean, that's just reflects badly on the president, whether it's his fault or not. So Biden has gotten good marks for his handling of the crisis in Ukraine so far, the sanctions that he's put on Russia.

He's walked a middle road by making sure US troops do not get involved and keeping US and NATO forces out of Ukraine for now. And people seem to think he's doing about the right thing, but the danger for Biden is if this becomes a prolonged stalemate in Ukraine, and we have sort of permanently higher gas prices with no end to this conflict in sight, people are going to lose patience and tolerance. In fact, I think Biden's maybe got a couple of weeks before his approval rating goes back down unless gas prices turn around and come back.

BRAD SMITH: Of course, this all happens during a midterm election year. And so right now, the White House in a tough position of having to decide where and how additional oil would be pumped or having partners around the world that could help unveil some more supply to meet demand and lower some of those prices in the near term, while at the same time, trying to unveil strategies for the long-term and a shift towards clean energy. And so how does that square up going into this midterm election year, especially for Democrats?

RICK NEWMAN: It's a real problem for Biden because the-- his long-term answer, which is more renewable energy to get down costs for American consumers, that is not going to happen this year. And it's not going to happen next year. I mean, it is true that as more-- as solar energy and wind and renewables do come online, they do get cheaper. But we just-- there's no way we can make that pivot fast enough to make a difference in the terms of the things that Americans care about right now, which is gas prices that are over $4.20 a barrel.

So I think the good news for Biden, I mean, people do need to remember-- the US president doesn't control the oil spigots in the United States. The president cannot decide that the United States is going to produce more oil. This is not Saudi Arabia or Russia. This is all in the private sector. But I think the good news for Biden is that the higher prices go, the more of a profit motive there is for private sector drillers to actually turn on some of these idled rigs and get more oil coming because they can cash in and make money on it.

So we are seeing that. The rig count is up. We are going to get more supply coming in the United States. But Biden is right when he says Putin is the one who's causing this most recent spike, and Putin is the one who has the most power to end it. I don't think he will.