Gasoline Prices Are Falling, But At What Cost?

Gasoline consumers around the world, from families to businesses, have had to deal with record prices at the pump for months as global demand has surged past the rate of new supply.

Some relief now appears to be on the way, mostly due to recession fears, which I’ll get into later. In the U.S., the average price for a gallon of gas has fallen about $0.26 since its all-time high of $5.02, set on June 14. Meanwhile, the price of Brent crude, the European benchmark, has plunged below its 50-day moving average and is now trading at levels last seen in April.

Oil Price Has Fallen Below Key Moving Average on Recession Fears

With midterm elections coming up, President Joe Biden has been under pressure to do something about crushing fuel costs, but in reality, the executive branch can do very little to bring prices down. Unlike many others, I don’t believe the president’s actions have gotten us here, nor can they do much to ameliorate the situation.

At the same time, Biden’s attempt to place full blame at the feet of Vladimir Putin strikes me as insincere and smells of desperation. Federal Reserve Chair Jerome Powell said it himself that prices were rising well before Russia invaded Ukraine.

Selling Gasoline Is A Low-Margin Business

I was also shocked to see Biden’s recent tweet insinuating that gas station owners were responsible for gouging prices. “Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now,” he said.