Joe Biden cannot ignore the political costs of rising energy prices
The Democratic Party of the United States has an innate fear of rising energy prices. There are good reasons: Jimmy CarterThe president from 1977 to 1981, in the minds of voters of a certain age, was related to the cars lined up outside the gas station and his well-intentioned but seemingly invalid instructions, namely, turning off the thermostat and putting on a sweater. The current President Joe Biden now has reason to worry that his domestic agenda and reputation, like his predecessor, will always be affected by rising oil prices.
This week’s data shows that U.S. inflation rate is at its highest level in three decades During October. The data provides more support for the “team resident”-economists who believe that the current rise in inflation will continue. In addition to higher overall figures than expected, this increase is broad and reflects a particularly sharp increase in rents.U.S. short-term Treasury bonds were sold after the data was released, indicating that investors believe The Fed needs to raise interest rates as soon as possible Not later.
On the other hand, the “temporary team” including Fed Chairman Jay Powell can find some comfort. Second-hand car prices soar again, Related to the shortage of semiconductor chips, but they are likely to resume their decline soon. Powell distinguished between “transient” and temporary inflation, pointing out that the Fed is interested in how the current surge affects the long-term trend, not how long it lasts. Excluding unstable food and energy to measure “core inflation,” the numbers look less compelling: 4.6% instead of 6.2%.It’s still high, but around Same level as in June.
As far as Biden is concerned, he cannot Changes in energy prices can be ignored, Especially after the votes in New Jersey and Virginia highlighted opposition to the Democratic Party. As Carter discovered, fuel prices are particularly politically sensitive. Joe Manchin, a West Virginia senator and a vacillating voter in the Senate, has said that he is concerned about the impact of another spending plan—the government’s infrastructure bill—on inflation.
That may be unfair. Infrastructure funds will only be allocated gradually, perhaps after the current round of inflation has passed. However, rising energy costs increase the impression that the government has lost momentum. It provides more motivation for skeptics, including Manchin, who are going further and faster on the issue of climate change.
However, there is little that Biden can do other than release the temporary ointment for the strategic oil reserve.He assembled Oppose the OPEC Cartel, Calling on Russia and Saudi Arabia to conduct more drilling. He can also find the culprit closer to home: American shale oil producers have largely failed to respond to price increases by increasing production.although Small drillers are expected to push up U.S. oil production Next year, as shareholders demand more discipline rather than spending on production, large companies are still shrinking.Some professionals also stated that they learned from the price war before the pandemic that in the end they will not be able to Win the market share battle with OPEC.
Biden promised to “rebuild better” after the coronavirus pandemic. His huge expenditures have helped to achieve a historic recovery, and US national income has returned to above its pre-pandemic peak. Now the challenge will become more difficult: to prove that he can provide a higher standard of living without compromising his commitment to combat climate change.