The price of gasoline drops in the US and gives Joe Biden a break

gasoline prices They are retreating in the US from all-time highs of mid-June, a positive trend for President Joe Biden that is explained by falling demand amid recession fears.

“I know those extra dollars and cents mean something. it’s a breathThe president of the United States tweeted Monday evening. “And we haven’t finished working to lower prices further,” he added as a promise.

The price of common gasoline continues on a 35-day streak since June 14, after hitting a record $ 5.01 per gallon (3.78 liters), which is equal to 1.32 dollars per liter, according to data from the American Automobile Association (AAA).

“Oil prices have clearly fallen, and with them, fuel prices,” said Bill O’Grady, a specialist at the consulting firm Confluence Investment.

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The price of West Texas Intermediate (WTI) oil, the benchmark of the US market, fell from more than $ 120 per barrel in early June up to $ 95 in mid-Julybefore a slight increase this week.

This cooling is due to the fears of a sharp economic slowdown or even a global recession, which would reduce the international demand for crude oil and also that for refined products, including gasoline.

The apprehension is linked to the tightening of monetary policies, with sharp rises in interest rates from central banks, especially the US Federal Reserve, remembers John Kilduff of Again Capital.

In the United States, the decline in gasoline demand is already palpable. In the week ending July 8, it fell to its lowest level since the beginning of the year. “It’s an important event”O’Grady said. “We were expecting a great summer season” on the roads, driven by the Americans’ desire to drive, after two years marked by the pandemic, he qualified.

“Historically, the increase in the price of gasoline has had only a marginal effect on demand,” says the analyst, who considers another explanation: the increase in teleworking. If remote working is now possible, “when the price of gas goes up, instead of going to the office for five days, you’ll only go for two,” he says.

Expectations

“My expectation is that prices will continue to decline during the fall,” said Kilduff, adding that costs will remain high by historical standards.

Republicans and part of public opinion they blame President Biden rising inflation, which could weaken Democrats in the November 8 legislative election.

The director of communications of the White House, Kate Bedingfield, pointed out in a statement the “historical measures” adopted by President Biden to ease oil and fuel prices.

The president has decided use an unprecedented amount of strategic reserves of oil from the United States, which fell by 136 million barrels since last September.

For Edward Moya, of Oanda, the recent rise in oil prices is also partly attributable to the president, “after President Biden’s trip to the Middle East (last week) did not involve any commitment” by the Saudis to raise it. production.

“There are two ways to approach the problem,” according to Bill O’Grady. “One is to increase supply and the other is to reduce demand. (Biden) has done very little to increase supply and a lot to increase demand “ with its strong economic support measures during the pandemic, he summed up.

However, the supply of crude oil to the market continues to be limited, especially after the sanctions imposed on Russia for the invasion of Ukraine.

Source: AP and AFP

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