According to AAA and the U.S. Energy Information Administration, U.S. oil prices rose nearly 4% last week, resulting in a national average of $3.75 per gallon at the pump, the highest recorded average since November 2022. This upward trend in prices may continue to trouble Biden as he prepares for his 2024 reelection campaign.
Global oil prices have also seen a significant increase, rising 16% since late June. CNN reports that prices have continued to climb for the past five weeks, and they are expected to rise even further in August and September due to production cuts by OPEC+ members, including Saudi Arabia and Russia. These cuts, announced in early July, are equivalent to about 1.5% of global supply and have played a significant role in the price increases.
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Natasha Kaneva, J.P. Morgan's head of global commodities strategy, attributes the price hikes to the OPEC+ production cuts. Additionally, Tom Kloza, global head of energy analysis at Oil Price Information Service, points out that the summer heat has reduced domestic oil refining capacity while increasing consumer demand for energy, further contributing to the rising prices.
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According to a July report by the International Energy Agency, there is currently a gap of approximately 500,000 barrels per day between global oil supply and demand. CNN reports that Biden administration officials are closely monitoring the increasing gas prices.
Despite Biden's promotion of his "Bidenomics" agenda as a successful strategy for economic growth, polling data from Real Clear Politics shows that only 38% of Americans approve of Biden's handling of the economy, while over 57% disapprove.
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Biden and top administration officials have been traveling across the country to promote the "Bidenomics" tax-and-spend agenda, with plans to rely on it as a key selling point in Biden's reelection bid, according to The Guardian.
The rising gas prices may indicate a return to a sustained period of higher costs at the pump, similar to the summer of 2022 when average prices reached an all-time high of around $5 per gallon in June. In response to that crisis, Biden released millions of barrels from the Strategic Petroleum Reserve (SPR) to lower oil prices before the November 2022 midterm elections.
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However, the SPR has not been fully replenished, and experts suggest that it may take "decades" to refill it. Last year's oil price spike exacerbated inflationary pressures, burdening American consumers with higher costs and causing significant political challenges for the Biden administration.
Republicans criticized the administration's energy policies and the surging gas prices, which further strained the finances of many Americans already grappling with inflation.
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