In his latest attempt to curb rampant inflation that affects practically every American, President Joe Biden has a new target: oil companies that are profiting handsomely even as gas prices approach record highs.
Biden chastised the wealthy after announcing a trip to Saudi Arabia, which he condemned as a “pariah” country but is anticipated to ask to pump more oil to relieve some of the strain on Americans as inflation wreaks havoc on his approval ratings and Democratic hopes in the November elections.
His actions coincide with the Federal Reserve’s planned aggressive interest rate hike on Wednesday, which might help cool the hot economy but also risk driving it into recession.
“Refinery profit margins considerably above average being passed directly onto American households are not acceptable during a time of war,” the President wrote in a letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP, and Shell on Tuesday.
The economy is at a crossroads this week. Here’s everything you need to know.
The economy is at a crossroads this week. Here’s everything you need to know about it.
“There is no doubt that Vladimir Putin is mostly to blame for the severe financial hardships that the American people and their families are experiencing.
However, amid a fight that has pushed gasoline prices above $1.70 per gallon, historically large refinery profit margins are exacerbating the problem “he penned “The crunch that families are facing needs a quick response,” the President said, urging oil executives to free up more refining capacity and explain to Energy Secretary Jennifer Granholm why such capacity had been decreased since 2020.
On CNN’s “New Day” on Wednesday, Granholm claimed that President Obama is “looking at every instrument, always” to lower gas costs, noting that he had already released millions of barrels of oil from US strategic reserves.
However, this action has had no effect on the price of gasoline, which has continued to rise. Granholm did not answer whether Biden supported a surtax on oil companies’ excess earnings, which has been proposed by some Democrats.
Biden’s gambit is clearly designed to follow through on his pledge to make reducing inflation and high prices his top concern, which is being fueled by record gas prices at the pump.
However, Republicans are sure to accuse him of attempting to create a political diversion to hide his incapacity to make life simpler for Americans ahead of the November midterm elections.
The President has blamed excessive inflation on Putin, supply chain disruptions caused by the pandemic, and other external reasons, often with some justification. However, the White House has denied that his massive stimulus initiatives during his first year in office are to blame.
Biden’s attempt to blame the US energy industry for higher prices was quickly dismissed, with American Petroleum Institute President and CEO Mike Sommers arguing that the administration’s “misguided policy agenda shifting away from domestic oil and natural gas” had exacerbated inflationary pressures.
Soaring food prices and record gas prices are part of a chronic dilemma that affects every American, wreaking havoc on those who can least afford to keep up with the soaring cost of living.
The economic storms are particularly damaging to individual and national morale because they are falling on a country that is already fighting to recover from another unusually shared era of suffering: a once-in-a-century epidemic.
They’re also distinct from the fears that accompany a typical recession, in which millions of people may lose their jobs while others remain unaffected.
In this awful moment when everyone’s money is disappearing faster, every American who eats or travels feels the pinch. Only those who grew up in the 1970s and 1980s remember the disorienting feeling of always having to catch up as the cost of everyday existence seems to rise daily.
Beyond the blame game in Washington, the most significant narrative is occurring outside the capital, where families are cutting their grocery expenses and devoting a portion of their salaries to just getting to work.
This dissatisfaction has very substantial political ramifications. The general nature of the repercussions of high inflation, as well as Biden’s and the Federal Reserve’s incapacity to immediately reverse it, make this an unusual and insoluble dilemma for the ruling party.
Biden can only give so many speeches empathising with the pain of families affected by high costs before his words become hollow due to his failure to change the situation.
The stock market is putting pressure on the Federal Reserve to take historic action on inflation.
The stock market is putting pressure on the Federal Reserve to take historic action on inflation.
And, given that his White House argued for months that inflation was a one-time, post-Covid-19 blip, and the Fed was slow to respond to the looming inflation storm, the government’s credibility is in serious jeopardy.
Why should Americans think they can solve the problem if they couldn’t forecast it?
Every day, the White House faces new challenges. Since the University of Michigan began collecting such data in a landmark survey in 1952, consumer confidence has dropped to an all-time low.
Stocks, which are the foundation of many Americans’ retirement savings, have entered a bear market, wiping out all of the gains made before the President took office.
And Biden’s plummeting approval ratings show he’s taking the heat, implying that comparisons to another Democrat, Jimmy Carter, whose presidency was shattered in part owing to an inflation nightmare, aren’t entirely off the mark.
Whether or not the White House understands the economy has been questioned.
Treasury Secretary Janet Yellen admitted earlier this month that she was mistaken about inflation after failing to forecast external variables such as the Ukraine crisis and supply chain bottlenecks, but her admission begs the question of whether the administration can see the future clearly now.
While the Fed is likely to raise interest rates by three-quarters of a percentage point on Wednesday, many analysts believe that its previous prudence will compel it to plunge the economy into recession to combat rising prices.
For Americans, a policy of increased interest rates will be painful as well. Borrowing money to buy automobiles or houses, for example, will become more expensive.
The unfavourable economic climate has put Biden in an exceptionally difficult political position, and it has given Republicans an opening to attack the rising cost of living ahead of the November midterm elections.
On Tuesday, the President made yet another attempt to persuade the people that he understands the problem and that lowering inflation is his top priority.
“So gas is up, and food is up, and we’re going to get it down come hell or high water,” Biden declared in a speech to Philadelphia labour groups. He stated, “Inflation is sapping the strength of a lot of families.”
However, because inflation and gasoline costs are often driven by forces outside the President’s control, he appears impotent, which is always a risk for a commander in chief.
And, with only five months until the midterm elections, the inflationary cycle has Democrats in a bad political position.
Similarly, Biden’s recitation of steps he’s taken to save the economy on Tuesday — such as the American Rescue Plan, which helped millions of Americans get back to work after the pandemic, and his bipartisan infrastructure bill — is unlikely to resonate with voters who are struggling to fill their gas tanks.
As experts wait for the Fed to raise interest rates, Biden recognises that inflation is “sapping the strength of a lot of families.”
As experts wait for the Fed to raise interest rates, Biden recognises that inflation is “sapping the strength of a lot of families.”
And when Democrats claim that the economy is doing well because of a strong job market, they can off as out of touch since millions of people are struggling.
For example, White House press secretary Karine Jean-Pierre was correct when she said this week that Americans were “fully qualified” to face the current problems, which included petrol prices averaging more than $5 per gallon and inflation of 8.6% in the year ending in May. However, the argument creates an opening that even the most inept political foe can easily exploit.
The White House’s nuanced claims about how the administration has actually presided over a great economic revival also ring hollow.
In an interview with CNN’s Victor Blackwell on Tuesday, National Economic Council Director Brian Deese recognised that there were “serious problems,” including rising costs.
“We are moving out of what has been the strongest economic rebound in modern American history to what can be a more stable phase of development,” he insisted.
It could get a whole lot worse.
There’s no hope for unhappy Americans — or Biden’s political figure crunchers — shortly. Oil price shocks resulting from the war in Ukraine, as well as the likelihood of a wrecked harvest in one of the world’s top breadbasket countries, might create fresh challenges in the months ahead.
As prices rise, the question of whether the Biden administration’s policies are to blame will become more prominent. When supply chain obstructions were caused by the epidemic, the closure of Asian manufacturing bases, and suddenly increased demand and decreasing supply as America reopened, it was reasonable to conclude that the health crisis was substantially to blame.
Similarly, Biden’s success in enlisting Western nations to support a draconian set of sanctions that have effectively cut Russian energy off from global markets contributed to the surge in oil prices.
However, early in his term, Biden pumped trillions of dollars into the economy with his pandemic rescue package and infrastructure investment, both of which are now being scrutinised more closely.
For months, former Treasury Secretary Larry Summers cautioned that his Democratic colleagues in the White House, as well as the Federal Reserve, were overconfident about the possibility of inflation. He claimed that large stimulus initiatives could cause the economy to overheat. Now it appears that he was correct. The White House isn’t exactly comforted by his present perspective.
Summers remarked on CNN’s “State of the Union” on Sunday that “when inflation is as high as it is right now, and unemployment is as low as it is right now… it’s usually invariably followed within two years by… recession.”
“I keep an eye on what’s going on in the stock and bond markets. I take a look at consumer sentiment. I believe that a recession is very likely in the coming year.”
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Meanwhile, despite its demonstrated failure to anticipate the economy’s future in an apparently unprecedented period, the White House is sticking to its more optimistic estimates.
Biden is doing his part. His plan to visit Saudi Arabia next month, a country he previously demonised for the assassination and dismemberment of dissident and Washington Post columnist Jamal Khashoggi, is prompted by a desire for the kingdom to pump more crude oil to lower gasoline costs in the United States.
Biden chastised Republicans in his speech on Tuesday for blocking programmes that would reduce costs in health care, energy, and education, as well as ease the overall financial burden on Americans, even though his plan was defeated in the Senate by a member of his own party concerned about inflation, West Virginia’s Joe Manchin.
Biden is also stoking the political fire by criticising the profits of large oil companies and asking that they pay their fair share of taxes. And, after years of grinding national turmoil, he’s pleading with Americans to be patient.
“I truly believe we’ve made extraordinary progress by laying a new foundation for our economy,” Biden said on Tuesday. “This will become clear once global inflation begins to recede.”
