Energy experts push back as White House takes credit for falling gas prices

The White House has been taking credit for falling gas prices — however experts say the actual motive for the drop is that Individuals are reducing back on driving and suspending holidays as a result of file ranges of inflation.

Gas prices have dropped to a nationwide average of $3.94 per gallon of normal unleaded gas, which is significantly larger than the $3.18 that it value a yr in the past presently. Simply two months in the past, the nationwide common surpassed $5 per gallon, an all-time excessive.

Earlier than the current dip, the Russian invasion of Ukraine exacerbated rising gas prices that had been brought on by snarls within the provide chain.

The worth of a gallon of normal unleaded gas fell nationwide to beneath $4 for the primary time in months.
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President Biden claims that his resolution to release 180 million barrels of oil from the Strategic Petroleum Reserve is the rationale for the current drop.

“I promised I’d address [Russian President Vladimir] Putin’s price hike at the pump, and I am,” the president tweeted on Aug. 11. “We’ve used our strategic petroleum reserve to get relief to families fast — and we rallied our allies and partners around the world to do the same. More work remains, but prices are dropping.”

The worth of US crude fell to a six-month low of $86.53 a barrel on Tuesday — which is almost $4 cheaper than per week in the past, although greater than $19 larger in comparison with a yr in the past presently. On Wednesday, US crude rose 1.6% to $87.92 per barrel.

However Biden’s personal Treasury Division acknowledged final month that the influence of the discharge was gentle and that it lowered the worth of gasoline between 17 cents and 42 cents per gallon.

Experts informed The Submit that the administration is unjustifiably tooting its personal horn.

“Gas prices have fallen for multiple reasons, but Americans cutting back on consumption is the major factor,” Anthony Schiavo, an analyst at Boston-based Lux Analysis, informed The Submit.

Schiavo cited authorities knowledge which confirmed that demand for gas dropped to eight.857 million barrels per day through the four-week interval that spanned July. That quantity is way decrease than final yr’s variety of 9.456 million barrels per day throughout the identical time interval.

Sky-high gas prices and file ranges of inflation have spurred Individuals to alter their driving habits, in accordance with AAA.

A recent survey by AAA discovered that some two-third of adults (64%) have modified their driving habits since March and that 23% of these polled mentioned they made “major changes” to deal with the surging gas prices.

Americans have been cutting back on driving and postponing vacations in response to higher than usual gas prices, surveys show.
Individuals have been reducing back on driving and suspending holidays in response to larger than traditional gas prices, surveys present.
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Experts agree {that a} drop in demand is the important thing issue that has pushed down gas prices.

“Economists typically attribute a drop in both the price and quantity in a market to be associated with falling demand,” Tomas J. Philipson, a College of Chicago economist who served as former chairman of White House Council of Financial Advisors beneath President Trump, informed The Submit.

“Thus, as both gasoline prices and travelling have been dropping, demand must have retracted. If increased supply was the driving cause of price declines, then traveling would increase due to the price drop.”

Final month’s determine can be about the identical as the variety of barrels consumed by Individuals in July 2020 — which was the peak of pandemic-related lockdowns.

Experts told The Post that falling demand in gasoline has led to lower prices at the pump.
Experts informed The Submit that falling demand in gasoline has led to decrease prices on the pump.
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“Continued SPR releases have relatively minimal impact and ultimately create bigger problems down the road for refilling the reserve, potentially at higher per barrel costs than today,” Benjamin Dierker, the director of public coverage at Alliance for Innovation and Infrastructure, informed The Submit.

Experts additionally cite different elements, together with the cut back speculative actions within the oil markets as properly as continued COVID-related lockdowns in China, which has additionally dampened demand.

“Gas prices have fallen because speculators have left the market,” Josh Solutions, the host of the web present The Buying and selling Fraternity, informed The Submit.

“A big part of the recent oil run that has been overlooked is the number of people trading futures, which in turn helps keep prices going up.”

In keeping with Solutions, futures contracts on oil have dropped over 30% since final month.

“The other factor is China,” he mentioned.

“Over the last three months, all the lockdown news out of China made many people reconsider China’s oil demand and this helped bring the demand down considerably.”

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