Oil & Gas

The recent increase in gasoline prices in the U.S. is causing inflation to rise higher than expected, which poses challenges for both the Federal Reserve's monetary policy and President Joe Biden's efforts to convince voters that the economy is performing well. Gas prices are expected to peak during the summer driving season and then gradually decline in the autumn, just ahead of the presidential election in November.

While current gas prices are slightly lower than a year ago, they have surged by a significant 60% since November 2020, before President Biden's election victory. This increase is typical for this time of year due to the transition to summer-spec fuels, increased driving during warmer months, and lower production during refinery maintenance.

However, the rise in gas prices could impact voter sentiment, especially in an election year. The Biden Administration has limited tools to lower gas prices, with the Strategic Petroleum Reserve at a low level. Additionally, gasoline inventories are below average, making prices susceptible to spikes from unexpected disruptions.

Although gas prices are expected to decrease before the election, the impact on President Biden's economic performance perception may already be felt. Recent data shows that U.S. inflation has risen more than expected, with gasoline and shelter costs contributing significantly to the increase. The Federal Reserve is closely monitoring the situation and may adjust interest rates accordingly.

Overall, while gasoline prices are likely to fall in the coming months, they may not be enough to offset the challenges President Biden faces in convincing voters of his economic stewardship.