Posted on 06/05/2022 1:58:00 PM PDT by blam
Since gasoline prices started surging at the end of last year, the U.S. Administration has been saying that it would consider and potentially use every tool at its disposal to lower prices at the pump. The problem for the Biden Administration—and for U.S. drivers—is that there isn’t a short-term solution to skyrocketing gasoline prices that set new record-highs day after day. Every tool at Biden’s disposal has its own drawbacks and political consequences, and every move the Administration is studying is unlikely to dent gasoline prices too much, analysts and White House insiders say.
The only “solution” to record-high gasoline prices is not one U.S. policymakers and consumers would want—a recession. And this is now a distinct possibility, although not a base-case scenario for most analysts.
Still, chances of a recession are rising, investment banks and analysts warn.
JPMorgan Chase, for example, warned just this week that a “hurricane” may hit the economy with the Fed starting to remove liquidity from the system and the Russian invasion of Ukraine that could send oil prices to $150 or even $175 per barrel.
“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” JPMorgan Chase CEO Jamie Dimon said at a financial conference this week, as carried by CNBC.
“That hurricane is right out there, down the road, coming our way,” Dimon added, warning, “You’d better brace yourself.”
Yet a recession is not inevitable, says Goldman Sachs, for example.
“We believe fears of declining economic activity this year will prove overblown unless new negative shocks materialize,” Goldman Sachs economists wrote in a report dated May 30.
“We continue to forecast slower but not recessionary growth, with a trade-related rebound to +2.8% in Q2 followed by +1.6% average growth over the following four quarters,” Goldman Sachs said.
If the U.S. avoids a recession and a subsequent decline in oil consumption, the Administration doesn’t have the tools to influence the price of oil, which is the single largest determinant in U.S. gasoline price trends.
Sure, the White House praised OPEC+, and Saudi Arabia in particular, after the group, including Russia, decided to accelerate the monthly production increases to 648,000 bpd in July and August, from the 432,000 bpd monthly hike so far.
“We recognize the role of Saudi Arabia as the chair of OPEC+ and its largest producer in achieving this consensus amongst the group members. The United States will continue to use all tools at our disposal to address energy prices pressures,” White House Press Secretary Karine Jean-Pierre said on Thursday.
Yet, the Administration still doesn’t really have “tools” that would cut gasoline prices substantially in America. Global supply is constrained because Europe is now sourcing growing volumes of seaborne non-Russian crude, global refinery capacity has shrunk by a few million bpd since COVID, and fuel inventories in the U.S. are at multi-year lows.
Gasoline prices are the single biggest obsession at the White House right now, with aides considering various measures—from limiting oil exports to easing environmental rules for gasoline content—none of which are going to materially bring down prices at the pump.
“We’re going to take every action that we can that will make a meaningful difference,” a White House official told Politico this week. But the official added,
“While understanding and dealing with the reality that global oil prices and gas prices are controlled by much greater forces than any one person.”
Each option the Administration has been studying comes with its own complicated and potentially painful political drawbacks and tradeoffs, and those options may not even lead to lower gasoline prices, sources with knowledge of the discussions at the White House told Politico.
“What they have is a whole bunch of 10-cent policies,” Claudia Sahm, a former Federal Reserve economist and member of the Obama administration’s Council of Economic Advisers, told Politico.
Meanwhile, the national average gasoline price hit another record at $4.715 a gallon on Thursday. That’s up from $3.041/gal at this time last year.
With less than $0.25 from $5.00, the national average could hit $5/gal around June 17, Patrick De Haan, head of petroleum analysis for fuel-savings app GasBuddy, said on Thursday.
Gasoline at $5 will certainly be politically painful for the Biden Administration. Yet, the only short-term “fix” for this is a slump in oil demand through a recession—an even more painful outcome for the economy, employment, and consumers.
WWTD?
What Would Trump Do
All that a Democratic-style “cure” takes is a few minutes with desperate Democratic-pirated Oval Office pen and phone (p&p) imo.
Wouldn’t be surprised if Oval Office gas price drop p&p happens a month before Election Day in desperate attempt to keep alleged election-stealing Democrats and RINOs in power.
After all, desperate Democrats can then claim that their America last political agenda fixed economy to try to win Election Day.
In fact, patriots are reminded that they must vote twice this election year. Your first vote is to primary career RINO incumbents. Your second vote is to replace outgoing Democrats and RINOs with Trump-endorsed candidates.
What a stupid statement.
Doing a lot of the same.
For the most part I have nowhere to go other than the office a couple times a week to do some stuff not doable by remote.
Once a month I try to visit the parents about 90 miles away.
In the Oct. 22, 2022 debate, Biden said his intention is to end the oil industry. If he has his way, you won’t be able to buy gas or diesel at any price.
Just lucky I guess. I’m not in a metropolitan city.
I bet Trump could lower gas prices - no problem 🤪
It’s a waste of time waiting for President Retard
“There’s No Immediate Cure For Sky-High Gasoline Prices”
Sure there is. Turn America’s oil companies to use America’s more than adequate supply of oil products.
The cure will be an economic collapse.
2023 will be a very bad year.
“I’m surprised at the high level of traffic moving in and around my area with these gas prices so high.
Traffic does not seem to be affected at all.”
The larger vehicles will start to cut back at $10, smaller ones closer to $15. Before that people will simply cut back in other places, with the obvious choices first.
“On Fox’s Maria Bartiromo we saw Wyoming Senator, John Barrasso, Senate Conference Chair spell out why the gas prices are intentional.”
Until more Republicans start doing this, which is attack Democrat INTENTIONS, not get in mud-fights regarding specific policies, we’ll lose.
The problem is that the Democrats have responses to every policy attack, but it’s much more difficult for them to respond to things like:
“Face it, the Democrat Party wants people to drive less, so they are, privately, CELEBRATING the very high gas prices.”
“Like or or not, if Democrats wanted lower gas prices, all they need to do is go back to Trump’s policies. They know that, but they will not because they CELEBRATE very high gas prices.”
(and don’t even discuss specifics of Trump’s policies...just leave it there)
Remember how jobs came back AND inflation was in check? Rhetorical question...
Ping
Sure there is, bring the Trump team back. They will fix it.
Bull crap. OPen the pipelines. Gives tax breaks to oil companies. Authorize drilling everywhere Trump did. It will change practically overnight.
If the US government stated and acted as if energy (not BS green scams) was a National security interest the price fall immediately. The announcement of nuclear, coal, Natural gas power plants and new refineries being approved for domestic and international production would do wonders. Executive orders, permits, reduction of regulations … the announcement with actions will make the USA powerful with energy at reasonable prices, jobs. … Not hard.
I think the oil producers are in the back pockets of the Dem lawmakers. They also “CELEBRATE very high gas prices” which generate more money with less effort on their part.
Absolutely.
The market moves on what they believe the future holds. If looking forward they see a tight market, prices jump now, not next month. Likewise if looking forward they see a lot of new oil coming on line, the prices start to drop now, ahead of the glut.
If a president, whoever, reverses everything Biden has done, opens the floodgates for permits, gets the regulators out of the way, lets them finish the almost finished pipeline, lets the refinery projects go forward, it wouldn’t matter that the new oil wouldn’t hit the market for a few months. The market sees it coming and prices start to soften and fall.
Along with the cost of everything that moves by diesel.
Every tool except to increase the production of domestic oil and complete the Keystone pipeline.
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