Americans are feeling pain at the pump — and there’s little the White House can do to shield them from it.
The highest oil and gasoline prices since 2014 are casting a shadow over the economic recovery from the Covid recession. Energy sticker shock threatens to intensify the nation’s biggest inflation scare in more than a dozen years. $3 gas also poses serious political problems for US President Joe Biden, even though the blame from Republicans is largely misplaced. Voters don’t like high gas prices and, fair or not, they have a history of blaming whoever is in the White House.
There is “a growing concern in the White House about a perilous run up in prices that could derail the global recovery,” Helima Croft, head of commodity strategy at RBC Capital Markets, wrote in a note to clients this week. The Biden administration has said “all tools in the toolbox” are under consideration to combat high energy prices. Unfortunately, industry sources say that toolbox is quite limited right now. And some options that may be under consideration could actually make the situation worse.
Plan A was to get OPEC and its allies, known collectively as OPEC+, to unleash the spigots. That has not been successful, at least so far. OPEC+ announced Monday it would only gradually add supply to the market, declining to heed calls from the White House to dramatically ramp up production. The OPEC+ news sent US crude surging above $79 a barrel for the first time since November 14. Prices at the pump also continue to climb. The national average price of regular gas rose to $3.24 a gallon on Thursday, up from $2.18 a year ago, according to AAA.