Soaring fuel costs pose threat to Biden administration, overall economic recovery

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ECONOMIC POLICY

Soaring fuel costs pose threat to Biden administration, overall economic recovery

The Biden administration is bracing for further fuel spikes but sees little recourse.

By Jeff Stein and Tyler Pager
June 17, 2022 at 10:42 a.m. EDT

Senior White House aides have in recent days explored new ideas for responding to high gas prices and looked again at some that they had previously discarded, desperate to show that the administration is trying to address voter frustration about rising costs at the pump. ... Biden officials are taking a second look at whether the federal government could send rebate cards out to millions of American drivers to help them pay at gas stations — an idea they examined months ago before ruling it out. Aides had found that shortages in the U.S. chip industry would make it hard to produce enough rebate cards, two people familiar with the matter said. White House officials also fear there would be no way to prevent consumers from using them for purchases other than gasoline, according to another person familiar with the discussions. Even if the administration embraces the proposal, it would probably require congressional approval and face long odds among lawmakers wary of spending more money.

Biden aides have also looked in recent days at invoking the Defense Production Act to move diesel and other refined products should localized shortages materialize, two people familiar with the matter said. Diesel prices have risen markedly, posing a major threat to the nation’s trucking and shipping industries, although experts say shortages appear to remain unlikely for now.

The revived brainstorming reflects how higher fuel costs have emerged as one of the Biden administration’s chief political threats and a serious hurdle for the economy overall. The White House has taken a number of actions to try to address the problem, such as committing to a historic release of the nation’s oil reserves and, on Wednesday, sending a letter to the nation’s refineries calling for more production and criticizing their profits. President Biden has also tried to increase production internationally, prodding the world’s oil producers and coordinating the release from national reserves with U.S. allies.

But those measures appear not to have helped substantially. The average gas price nationally rose above $5 a gallon for the first time this weekend, a roughly 11 percent increase from just last month, according to AAA. (The average ticked down very slightly both Thursday and Friday, but it remains at $5.) Polling suggests widespread frustration with rising prices, increasing the likelihood that voters punish Democrats this fall and give Republicans control of at least one house of Congress next year.

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By Jeff Stein
Jeff Stein is the White House economics reporter for The Washington Post. He was a crime reporter for the Syracuse Post-Standard and, in 2014, founded the local news nonprofit the Ithaca Voice in Upstate New York. He was also a reporter for Vox. Twitter https://twitter.com/jstein_wapo

By Tyler Pager
Tyler Pager is a White House reporter at The Washington Post. He joined the paper in 2021 after covering the White House at Politico and the 2020 presidential campaign at Bloomberg News. Twitter https://twitter.com/tylerpager