Aug 24, 2022 - Energy & Environment

Democrats aren't out of the woods yet on energy prices

West Texas Intermediate crude oil futures
Data: Yahoo Finance; Chart: Skye Witley/Axios

The White House is more than happy to point out gasoline prices have been falling for over two months. But Democrats aren't out of the political woods on energy costs.

The big picture: Crude prices — the biggest variable in gas prices — have regained ground over the last couple of weeks after falling steeply in recent months.

WTI, the U.S. benchmark, is trading in the mid-$94 range this morning.

  • GasBuddy analyst Patrick De Haan tells Axios that if the oil price drop is over, for now, average U.S. prices should level out around $3.69 per gallon or maybe somewhat lower.
  • That's way below the $5 average reached in mid-June, but still fairly steep by historical standards.

Threat level: Gasoline prices are the most visible energy cost but hardly the only one. Axios' Matt Phillips reports that Europe's natural gas crisis is spilling into the U.S. market.

  • U.S. natural gas prices briefly hurdled $10 per million British thermal units (BTUs) on Tuesday, the highest since 2008. They are up more than 150% this year.

Why it matters: U.S. prices are nowhere near European levels, but they'll still almost certainly push electric and heating bills higher.

  • So keep an eye on the political impact of heating bills heading into the fall and winter, which could reinvigorate voter angst about rising costs of living, despite progress elsewhere on inflation.=

The intrigue: Getting back to gasoline, Bloomberg has a good story on the politics as prices have come down under $4 per gallon (currently $3.88 per AAA).

  • The decline blunts a key political weapon for Republicans, the piece points out, but also quotes analysts saying gas prices are still a factor — especially if they go back up.

What we're watching: Oil prices got a lift this week after the Saudi energy minister floated the idea that OPEC+ could cut production.

  • It's just tea leaves, but that could suggest the cartel hopes current prices are something of a floor. Whether and when European efforts to isolate Vladimir Putin start taking a significant bite out of Russian supplies is another variable.
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