The Biden administration sent more than five million barrels of oil to Europe and Asia in an effort to lower gas prices.
This comes after President Joe Biden demanded energy producers to lower gas prices, tweeting: “Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.”
About one million barrels per day is being released from the Strategic Petroleum Reserve (SPR) through October. The flow is draining the SPR, which last month fell to the lowest since 1986.
U.S. crude futures are above $105 per barrel and gasoline and diesel prices are above $5 a gallon in one-fifth of the nation. U.S. officials claim that oil prices could be higher if the SPR had not been tapped.
Because Americans are spending more on gas, they are cutting back on other consumer goods and services, said Peter McCrory, U.S. Economist at J.P. Morgan Research.
“We think the 20% spike in gas prices may be lowering nominal non-gas consumption by $9.6 billion per month—shaving 0.26% off of overall nominal consumption on an annualized basis,” McRory said.
To help offset consumers from soaring inflation rates and skyrocketing gas prices, the White House is reportedly looking into a new stimulus plan to send gas rebate cards to American households.
“The president has made clear that he is willing to explore all options and hear all ideas that would help lower gas prices for the American people,” a White House official shared.
But officials are concerned that recipients would use the cards for purchases of items other than gas and recent shortages in the chip industry may create an obstacle in producing the cards. CNN also reported that Republicans in Congress would not sign off on such a stimulus plan.
Another concern is that stimulus checks have been cited as one of the contributing factors to the current soaring inflation.
“Since the first half of 2021, U.S. inflation has increasingly outpaced inflation in other developed countries,” according to a study by the San Francisco Federal Reserve. “Estimates suggest that fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021.”
