Why oil and gas prices are upsetting the US. Report Nyt
Rising oil and gas prices add to US economic challenges. The analysis of the New York Times
As the US economy struggles to emerge from its pandemic-induced hibernation, consumers and businesses have encountered product shortages, hiring difficulties, and often conflicting public health claims.
Now the recovery faces a more familiar enemy: rising oil and gasoline prices.
The West Texas Intermediate, the reference price of oil in the United States, reached $ 76.98 a barrel on Tuesday, its highest level in six years, as OPEC, Russia and their allies failed to find a agreement on increasing production . Prices moderated over the course of the day, but remained nearly $ 10 a barrel more than in mid-May.
Reflecting the rise in crude oil prices, the average price of a gallon of gasoline in the United States rose to $ 3.13, according to AAA, from $ 3.05 a month ago. A year ago, when the coronavirus kept people at home, gasoline only cost an average of $ 2.18 a gallon, the NYT writes.
The auto company said on Tuesday it expected prices to rise by another 10-20 cents through the end of August.
The rapid rise in price comes at a sensitive time for the US economy, which was already experiencing the fastest inflation in recent years amid resurgent consumer activity and supply chain bottlenecks. And it could cause a political headache for President Biden as he tries to convince the public that his policies are helping the country find its way back.
Asked about oil prices at a White House press conference on Tuesday, Jen Psaki, the press secretary, said the administration was monitoring the situation and had been in contact with officials from Saudi Arabia and other large producers. But he indicated that the president has limited control over fuel prices.
“Sometimes there is a misunderstanding about what causes fuel prices to rise,” Ms. Psaki said. "The availability of the oil supply has a huge impact."
Indeed, energy experts said the recent jump in oil prices has more to do with global economic and geopolitical forces than domestic politics. Global energy demand plummeted when the pandemic spread last year, ultimately leading the Organization of the Petroleum Exporting Countries and its allies to cut production to avoid a collapse in prices. Demand began to rebound as economic activity recovered, but production did not keep up: OPEC Plus, the oil producers' alliance, canceled a conference call on Monday to discuss the increase in production.
The direct economic impact of rising oil prices is likely to be much more modest than in past decades. Energy in general plays a smaller role in the economy due to improved efficiency and a shift away from manufacturing, and the rise of renewable energy means the US is less dependent on oil in particular.
Furthermore, the increase in domestic oil production in recent years means that rising oil prices are no longer an unequivocal negative for the US economy – higher prices are bad news for motorists and consumers. but good news for oil companies and their workers, and the vast network of equipment manufacturers and service providers who supply them.
Joe Brusuelas, chief economist at accounting firm RSM, said oil prices of $ 80 or even $ 100 a barrel don't worry him. Only when prices exceed $ 120 a barrel will he start to seriously worry about the economic impact, he said.
"The world has changed," said Brusuelas. “The risks are no longer what they used to be”.
However, the costs of higher prices will not be felt in the same way. Poor, working-class Americans drive older, less efficient cars and trucks and spend more of their income on fuel.
Scott Hanson of Western Springs, Ill., Said $ 40 was enough to fill his gas tank last year when he lost his job as an office manager due to the pandemic. Now Mr. Hanson is paying over $ 60 to fill his Dodge Charger, making trips to take his mom to her doctor's appointments more expensive. Gasoline in Illinois averages $ 3.36 per gallon, according to the AAA.
“It's too much for too many people who have lost their jobs or have low-paying jobs,” said Mr. Hanson. "All the evil that could happen is happening all at once."
Gasoline prices also remain a powerful and highly visible symbol of rising prices when many consumers – and some economists – are nervous about inflation. Consumer prices rose 5% in May from a year earlier, the largest annual increase in more than a decade, and forecasters expect June data, which will be released next week, to show another significant increase. .
Federal Reserve policymakers have said they expect the rise in inflation to be short-lived, and are unlikely to change that view based on rising energy prices, which are often volatile even in normal times, he said. said Jay Bryson, chief economist at Wells Fargo.
But if rising oil prices lead consumers and businesses to believe that faster inflation will continue, this could be a more difficult problem for the Fed. Economic research suggests that the prices of things consumers often buy. , like food and gasoline, weigh heavily on their inflation expectations. With public opinion polls showing growing concern about inflation, rising oil prices increase the risk of a more lasting shift in expectations, said David Wilcox, a former Fed economist who is now a senior. fellow at the Peterson Institute for International Economics in Washington.
“I don't expect oil prices to be the straw that breaks the camel's back, but it's another drop that's already creating a lot of pressure,” said Mr. Wilcox. "There is a much greater risk today of an inflationary psychology taking hold than I would have said three or five years ago."
Republicans took advantage of the price hike to criticize Mr. Biden's energy policies, including his decision to cancel permits for the Keystone XL pipeline and his pause on the sale of new oil leases in federal lands, a move that a federal judge blocked.
"Bad policy is already creating conditions such as rising gasoline prices that we haven't seen in a long time," wrote Senator John Barrasso, a Republican from Wyoming. (Energy experts say Mr. Biden's policies have not had no significant impact on oil prices).
Ms. Psaki noted that Mr. Biden has always opposed an increase in the federal gas tax, which some Republican senators and business groups have asked for to help finance infrastructure spending. The deal Mr. Biden struck with a bipartisan group of senators last month did not include an increase in the fuel tax.
"Ensuring that Americans don't have to put up with a burden at the pump continues to be a top priority for the administration," Ms. Psaki said. “This is one of the main reasons why the president was vehemently opposed to a gasoline tax and any vehicle mileage tax, because he felt it would weigh on the shoulders of Americans. And this was a bottom red line for him ”.
Domestic oil production is expected to increase in the coming months as higher prices and rising demand push companies to step up drilling. But any rebound will likely be gradual. U.S. oil companies have been cautious about investing in new exploration and production over the past year, even as oil prices have roughly doubled since the first half of 2020, when the pandemic hit demand. Company executives say they are focused on share buybacks and debt relief as sales pick up.
The Department of Energy expects production to average 11.1 million barrels per day this year and 11.8 million in 2022, 400,000 barrels per day less than in 2019.
Even without a surge in domestic oil production, many experts doubt that prices will continue to rise at their recent pace. OPEC members generally agree that production should increase, but disagree on how much. And a new nuclear deal with Iran or a thawing of US-Venezuela relations could bring a flood of new supplies. Iran alone could potentially add 2.5 million to three million barrels of oil per day to the global market, or roughly a 3% addition to supplies.
At the same time, the spread of new coronavirus variants has led some countries to re-impose or tighten restrictions on activity, which could dampen demand for oil. Capital Economics, a forecaster, said on Tuesday it expects oil prices to peak around $ 80 a barrel before falling back as supply increases. But the company said a price collapse or a further spike are both possible.
(Extract from the foreign press review by Epr Comunicazione)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/prezzo-petrolio-gas-stati-uniti/ on Sun, 11 Jul 2021 06:07:54 +0000.