- In further signs that inflation, at least in respect to gas prices in America, may be plateauing, prices at the pump have now fallen below the key psychological level of US$4.
- And the slide in gasoline prices isn’t confined to the U.S. as jitters over an impending global economic slowdown have offset some of the effects of the Russian invasion of Ukraine.
Gas, Gas, Gas, Gas, Gas,
Gas, Gas, Gas, Gas, Gas,
Everybody!
In further signs that inflation, at least in respect to gas prices in America, may be plateauing, prices at the pump have now fallen below the key psychological level of US$4.
With the Republicans holding out five-dollar gasoline as a war cry ahead of the midterm elections, that battle cry is looking increasingly hollower as fears of a looming recession have put the kybosh on once soaring fuel markets and cooling a major component of headline inflation.
In the fastest decline since the 2008 Financial Crisis, gas prices are now down by about a fifth from their high of US$5 in mid-June.
And the slide in gasoline prices isn’t confined to the U.S. as jitters over an impending global economic slowdown have offset some of the effects of the Russian invasion of Ukraine.
U.S. gasoline demand has also slipped, with the Energy Information Administration reporting that demand over the last four weeks is 6% lower than from the same time a year ago, in further signs that consumers are becoming more conservative in their expenditure.
Nevertheless, headline inflation in the U.S. remains high and rhetoric from the U.S. Federal Reserve continues to be hawkish, suggesting that policymakers will want to see several consecutive months of reduced price pressures before pivoting to less aggressive rate hikes.
Americans consume about a fifth of the world’s oil, despite only being home to 4% of the world’s population, so decreased demand in a country where 92% own at least one vehicle, will help to ease inflation globally as well.
To be sure, the Biden administration has also taken measures to release record volumes of crude oil from America’s emergency stockpile and leaned on producers to pump more, but it’s unclear if that has had significant effect in bringing down pump prices.
More importantly, the price of diesel, crucial for logistics via trucking and agriculture, will also help manufacturers and farmers cut costs of operation, and hopefully bring down price pressures.
