‘[T]he price that now matters the most is that political perennial — the one at the petrol pump.’
Daniel Yergin, S&P Global
If President Joe Biden wants to stay in office, the price of gas could make or break his chances. His campaign team is probably very worried about this.
He said that in an opinion piece in the Financial Times on Tuesday. Yergin is vice chair of S&P Global and a longtime energy analyst.
Price jump was caused by OPEC+ countries’ recent decision to cut back on oil exports, according to him. According to FactSet, the North American benchmark price CL00, -0.02% went up nearly 6% just in June.
Gas prices are also going up. The average price of a gallon of gas is now $3.47, up from $3.10 six months ago, according to AAA, which keeps the records.
Yergin writes that this is happening at the same time that Biden has been in charge of a huge drop in U.S. inflation over the past two years.
As the summer months approach and more people hit the roads, Yergin wrote, gas prices “could certainly go higher.” This is because of the increased risk of a wider war in the Middle East.
Also, since it’s now hurricane season, there’s a greater chance that a big storm will damage the huge oil complex in the Gulf of Mexico and along the Gulf Coast, he said.
‘Gas prices are probably the greatest risk factor facing Biden right now.’
Justin Begley, Moody’s Analytics
In 2021, Biden started releasing oil from the Strategic Petroleum Reserve to help the market get back to normal after the COVID-19 pandemic ended and Russia invaded neighboring Ukraine in February 2022.
At its highest point, 40% of the reserve had been used up. However, in recent months, the government has been adding to the reserve.
Last month, the government also said it would release 1 million barrels of gasoline from the Northeast Gasoline Supply Reserve to help bring down gas prices at the start of the “summer driving season.”
A new study by Moody’s Analytics found that changes in gas prices could be the biggest economic risk Biden faces in his campaign to stay in office in November.
An economist at Moody’s Analytics named Justin Begley told MarketWatch in a recent interview, “Gas prices are probably the biggest risk Biden is facing right now. It wouldn’t take much to make gas prices go up.”
Yergin said that Biden might think about letting more oil out of the SPR or try to persuade Saudi Arabia to get oil back on the market as soon as possible.
Yergin said that Biden might be able to win his re-election battle in November since gas prices are currently low across the country. “The political heat really starts to rise when prices get close to $4 per gallon,” he wrote. “And if crude prices go up, they might get there this summer and early fall.”
