Inflation speeds up due to flawed policies and rising oil prices.


Gas⁣ Prices on the Rise: What You Need to Know

Anyone who has filled up their gas tank in the last couple of months ‍could see this coming. Having hit a low in December 2022, U.S. retail gas prices have ‌been‍ on‌ the rise ever since. The ​increase started slowly, then in August, more rapidly. This week, the average U.S. retail price for gas reached $3.94 per gallon,‍ an 18.5 percent increase from year-end.

Inflation ​on the Rise

Inflation, ⁢which never really went away, is accelerating again. This ⁤morning’s Consumer Price Index (CPI) report for August confirms what I’ve been⁢ saying since January, which is that inflation—driven by rising oil ⁤prices—would reaccelerate in ⁢the second half of the year.

August’s headline CPI result came in ⁣at 3.7 percent, ​up‍ uncomfortably from July’s 3.2 percent print. The index components for gasoline and fuel oil ⁢increased by 10.6⁣ and 9.1 percent, respectively, ‌from July on a seasonally adjusted ⁢basis. Even excluding the more ⁢volatile food and energy categories, core CPI rose 4.3 percent in ‌August, driven ⁢by rising costs‍ of shelter.

Retail gas and⁣ diesel products, airlines, rail, and ⁣trucking companies, along with food‌ and​ even‍ electricity to the home, are heavily impacted by⁣ the ‌global price of ⁢oil.

Oil prices are up by one-third from July’s lows,‍ and now hover just below $90 per barrel. While at⁢ a 10-month high, prices remain well‍ below last‌ summer’s high, when oil‍ topped $120 per barrel and inflation ‌hit 9.1 percent.⁣ But market pressures⁢ are likely to push oil‍ prices further ‍in the⁢ wrong direction. And with higher⁤ oil‌ prices, inflation will follow as night ‍follows day.

Global oil‌ markets remain tight. U.S. sanctions on Russia have hurt Western markets more ‍than Russia itself. OPEC+, which includes Saudi​ Arabia, Iran, ​and Russia, among others, have been enforcing production limits. Iran and Russia are sanctioned ⁢by the United States, but still manage to get oil to China, India, and⁤ elsewhere. OPEC now estimates that ​the world will be short by over three ‍million⁣ barrels in the fourth quarter, putting further pressures on prices.

The Biden administration has foolishly drained America’s emergency supply of oil in a vain attempt to hold back ‌the tide of rising prices resulting from global supply constraints.

The Biden ⁢administration drew over‌ 265 million barrels ⁢from the U.S. Strategic Petroleum Reserve (SPR) between ‌November 2021 and January 2023, when it finally ⁢paused in the face of falling oil ‌prices. But starting‌ in April 2023, ⁣seeing that higher gas prices would again threaten the ⁤economy and stimulate inflation, the Biden administration quietly began making further withdrawals. At the beginning of September 2023, the SPR had only 350 million barrels remaining, less‍ than half ⁢of its capacity and down 45⁤ percent from ⁤the end of 2020.

Using the SPR as a ⁤political tool—i.e., to effect ⁤price⁣ controls before the midterm elections—was always a foolish idea. At worst, ⁤the move will leave the⁢ country well short in the event of ‌a national⁣ emergency affecting crude oil production and transport. As painful as higher ‍prices are, the United States should not run this strategic risk ⁢for a few‌ pennies⁢ at the⁢ pump. More ⁢likely, the United ⁤States will be​ required to replenish the SPR at much ‌higher prices than ‌before, widening the budget deficit even ⁢further.

But the real strategic folly of the Biden administration has been the hamstringing of‍ American energy production in pursuit ​of green energy virtue signaling. From the canceling in 2021 of the⁤ Keystone XL pipeline ⁣to last week’s annulling of Alaskan drilling leases, executive orders and regulations ⁤have stifled domestic energy development. ⁢This shortsighted ⁢approach has made the United States more dependent on foreign ⁢oil and vulnerable⁢ to price shocks.

" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
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