White House shows renewed focus on gas prices
The White House is showing a renewed focus on hammering down gasoline prices — including calling oil company executives to Washington for face-to-face talks Thursday.
Why it matters: Prices at the pump have become a central focus for increasingly cranky consumers, and a ubiquitous reminder of the administration's fecklessness on inflation, their top concern.
- The executives will likely get an earful from Energy Secretary Jennifer Granholm, though it remains unclear what combination of carrots and sticks could coax the industry into pumping more crude and selling it more cheaply.
State of play: The risk that runaway gas prices pose politically has prompted a flurry of activity.
- President Biden Wednesday called for Congress to suspend the Federal gas tax (though that could be counterproductive).
- Administration officials are not ruling out restrictions on energy exports (tricky in light of the need to help supply European allies facing the loss of Russian supplies).
- And next month, Biden is expected to travel to Saudi Arabia — a country he once vowed to make "a pariah" on the world stage — to try to cajole more crude out of the kingdom.
What they're saying: "With the world now focused on the risks for high and rising energy inflation, the likelihood of policy correction is rising," wrote Goldman Sachs analysts in a client note this week, referring to government efforts to stimulate oil production.
- Rising production out of Saudi Arabia and Russia — amid falling political will globally to blackball purchases from both — could help lower prices, per Goldman.
The impact: Market prices for wholesale crude oil and gasoline have started to roll over.
- U.S. benchmark West Texas Crude is down about 8% this month, to just above $105 per barrel.
- It's down about 14% from its recent peak of $122.
Yes, but: This isn't just about what the administration is doing. Much of the decline is also related to the growing odds that the Federal Reserve's rate hikes could push the country into a recession over the next year to 18 months, which would mean lower demand for oil.
- Continued weakness in China — including a new lockdown in Shenzhen this week — is expected to be a drag on global growth.
The bottom line: Soaring gas prices are a killer for politicians. It only makes sense that the administration is trying to do something about them.