U.S. retail gasoline and diesel prices at the pump hit a new record, according to the American Automobile Association (AAA). Soaring fuel prices come three weeks before the summer driving season begins, a challenge for the Biden administration and Federal Reserve as they combat the highest inflation in four decades.
Across the board, fuel prices are at record highs: AAA's new data shows the average gasoline price at the pump hit $4.374 a gallon (as of Tuesday). The retail price of diesel fuel also hit a new record of $5.50.
It turns out there's no easy solution for the Biden administration to halt rising fuel prices, even though they instructed a massive one million barrels per day release of the SPR through the midterm elections. Still, markets are forward-looking and have continued to rise as it turns out the White House has instructed the SPR to begin refilling operations in 2023.
The SPR was supposed to subdue fuel prices ahead of the driving season, but that seems unavoidable. Energy is a key driver in inflation that will continue to crush consumer confidence into the summer.
While high gas prices hit consumers, expensive diesel has battered the industrial economy because it's the lifeblood of the nation's transportation system.
"Diesel is in everything ... the diesel price shock will be longer-lived because it will take time for systems to digest and pass through," Mark Finley, a fellow at Rice University's Baker Institute for Public Policy, told Bloomberg.
Domestic demand remains elevated as gasoline and diesel inventories are some of the lowest in years or on record. East Coast diesel inventories recently hit a new record low. That has sent prices to a record high, with a $2 spread over gasoline prices. Diesel tends to be 50 cents to $1 above gas prices in normal times, though today's spread reflects very tight supplies.
On Tuesday, President Biden will deliver a speech to the American people about the spike in inflation that has pushed consumer prices to more than 8%. According to Reuters, he's not expected to deliver new policies to quell inflation but rather blast Republicans for not having a plan to fight inflation.
Food and gasoline prices have soared so much in the last year (well before Russia invaded Ukraine), then hyperinflated after the invasion, that consumers are rapidly adjusting their lifestyles. A Yahoo/Maru Public Opinion survey found that 66% of vehicle owners or households have made "significant changes to their driving patterns."
To deflect blame, the Biden administration has used every trick to scapegoat inflation. They routinely blame Russia but fail to express to the American people that inflation was already at four-decade highs before the invasion of Ukraine. In fact, inflation is derived from the massive expansion of the Federal Reserve's balance sheet and the federal government helicopter dropping stimulus checks during the pandemic.
Democrats are in trouble come midterms as their inability to quell inflation gives Republicans an edge. The latest CNN poll conducted by SSRS shows that the economy is the top issue on voters' minds. Half of all respondents said it was the most important issue (not abortion).
So who does the Biden admin blame this time for rising gas prices?