Oil Falls As Biden Warns Refiners; Are More Falls Coming?
Oil prices plummeted as much as 3% on Wednesday. The Federal Reserve raised interest rates to their highest level since the 1990s; this fueled worries that the central bank could force the world’s largest economy into recession to combat inflation at 40-year highs.
Biden contributed to the worries in the oil market by urging U.S. refiners to produce more fuels; he said they owed it to Americans to help ease the burden of record-high gasoline and diesel prices. Biden made an announcement in a letter to refiners, including oil majors such as Exxon Mobil and Chevron; According to him, historically large refinery profit margins being transferred directly onto American households are not acceptable at a time of war. The letter stated that companies must make prompt efforts to improve the supply of gasoline, diesel, and other refined products.
More Fluctuations in the Oil Markets
Biden’s plea to refiners comes as sky-high oil costs exacerbate the economy’s inflationary problems. According to the American Automobile Association, the president recently suggested that refiners face a “windfall profits tax” after the national average for a gallon of gasoline surpassed $5 for the first time over the weekend.
The national average is now $5.014 per gallon; up 54 cents from a month ago and $1.94 more than a year ago. The EIA released its weekly industry report on Wednesday. According to it, U.S. crude output surpassed 12 million barrels per day for the first time since April 2020; adding to the pressure on oil. It was an indication that oil at $120 a barrel was finally stimulating more output, albeit at a slower rate than was required to keep record-high fuel costs in check.
The Federal Reserve, for its part, announced a 75-basis-point, or three-quarter-percentage-point, boost in interest rates, the third since the coronavirus epidemic two years ago. Only 28 times since the 1970s has a rate rise of 75 basis points or more happened, according to historical statistics.