“If you lock down one-quarter of the country and don’t let them drive anywhere, they will consume less fuel,” Johnston said. The policy has obliterated China’s gasoline use. As of last week, nearly 200 million people remained under some form of lockdown in China, according to The New York Times. Hundreds of millions of people-including almost the entire population of Shanghai, China’s most populous city-spent some of the spring locked down. By August 2020, thousands of people were able to attend a crowded music festival in Wuhan, the Chinese city where the pandemic began, while much of the West was still dealing with the daily threat of COVID.īut even as the rest of the world has gotten vaccinated and effectively moved on from the pandemic, China has doubled down on zero COVID-even after the Omicron variants made it all the more difficult to stop transmission. During the first half of the pandemic, China’s zero-COVID approach was able to keep cases to a minimum through widespread testing and by heavily restricting travel in and out of the country.
The reason for this crash in demand is quite simple. At a moment when widespread shortages imperiled the world economy, Xi’s pandemic policies took “a huge amount of pressure out of the global commodity system” by massively crimping domestic demand, he said.
Although China has aimed to prevent any COVID cases since the pandemic began, its policies became more draconian and widespread in the spring after the more infectious Omicron variant became dominant. Yesterday, China indefinitely delayed the release of its third-quarter GDP data, an ominous sign that its economy may have deteriorated even more than anticipated.įor many oil-industry specialists, China’s COVID policy “is the boogeyman that encompasses everything,” Rory Johnston, an oil analyst and the author of the Commodity Context newsletter, told me. Those restrictions-plus China’s preexisting economic slowdown-have drastically reduced the country’s apparent demand for oil, easing up the global market in the process. Since March, President Xi Jinping’s aggressive zero-COVID policy has imposed intermittent lockdowns and travel restrictions throughout China, essentially subjecting hundreds of millions of people to house arrest across the country. But one of the biggest reasons for the dip that has corresponded with the best few months of Biden’s presidency has gone underappreciated: China’s policies helped crash global oil prices. Naturally, why gas prices have fallen over the past year has garnered a lot of attention- including from me. When the numbers on gas-station signs tick up or down, it leads to downstream effects that trickle out across the rest of American society. (More recently, gas prices have risen, and Biden’s party looks to be in a worsening position with the midterm elections looming.)Įven if some of this is a coincidence, the power of gasoline prices is hard to overlook. By late August, gas prices had fallen below $4 a gallon, and according to Gallup, Biden’s approval rating climbed to its highest level in a year. Congress passed the Inflation Reduction Act, and Dark Brandon became a meme. In June, a gallon of gas cost more than $5 in the U.S., higher than ever before in history, and Biden’s approval rating reached a nadir.īut then gas prices began to fall the following month-and the president started ticking items off his to-do list. When Russia invaded Ukraine earlier this year, oil prices soared. You know what happened next: The United States pulled out from Afghanistan as gas prices were already climbing, and Biden’s popularity tanked. And in Biden’s honeymoon phase, gas prices were comfortably below $3 a gallon, until May 2021. When Biden took office, he was broadly popular, helping the narrow Democratic majority in Congress pass a COVID-19 relief bill and send out $1,400 checks. Every major political dynamic, every twist and turn in approval polling and legislative possibility, seems driven by whether gas prices are going up or down.Ĭonsider Joe Biden’s presidency. You’d be forgiven, at this point, for believing in what the MSNBC host Chris Hayes calls the “gas prices monocausal theory” of American politics.
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