Update: For the umpteenth time this year, President Trump has lashed out at OPEC over soaring oil prices (and therefore gas prices): “The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher.”
Then Trump escalated his rhetoric, appearing to threaten the withdrawal of support unless action is taken “…the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW! “
This is coming after reports that Trump asked the Saudis to increase production by 2mm barrels and that they agreed.
President Trump has not been shy of expressing his views to OPEC…
U.S. gasoline prices are at a four-year-high this year as a result of the higher price of oil which has reached a three-and-a-half-year high in recent weeks.
The increased pump prices are now eating into the disposable income of the average American household that will have a total of $440 less to spend this year on other goods and services because this money is expected to go for buying higher-priced gasoline.
The higher spending on gas could offset one-third of the gains from the tax cuts, with low- and middle-income families feeling the pinch much more than higher-income earners, according to S&P Global economists Beth Bovino and Satyam Panday.
“This would be tantamount to a tax increase for American households,” the economists wrote in a recent report, quoted by Bloomberg. “This is especially true for middle- to low-income Americans.”
The higher-income families, on the other hand, will be less affected by the increase in pump prices because spending on gasoline accounts for a smaller share of their total disposable income.
“The income tax cut is virtually compensating those who were hurt least from the oil-price change, which may result in even larger inequality,” according to Bovino and Panday.
Despite the higher spending on gasoline, however, the overall U.S. economy is now less oil-dependent than in the past, so oil prices in the $70s will have a more mitigated impact on economic growth than it would have in previous years, the S&P Global economists and Fed economists say.
For this year’s April–September driving season, the EIA expects U.S. regular gasoline retail prices to average $2.87/gallon (gal), up from an average of $2.41/gal last summer, mostly due to expectations of higher crude oil prices. According to the Short-Term Energy Outlook (STEO) from June, monthly average gasoline prices may have peaked in June at $2.92/gal and are expected to drop gradually to $2.84/gal in September.
For this year’s July 4 holiday, U.S. drivers will be paying the highest Independence Day average gas prices since 2014 – at $2.90/gal, compared to $3.66/gal for July 4 in 2014, when oil prices were $100 a barrel, according to GasBuddy.
Full article: Trump To OPEC ‘Allies’: “Reduce Oil Prices Now” Or Lose US Defense Shield (ZeroHedge)