US consumer prices continued to rise last month - but the Fed probably won't raise rates (Photo by Robert Nickelsberg/Getty Images) Robert Nickelsberg/Getty Images “And day to day, oil prices are nowhere near in control of the Fed.”ĬOLCHESTER, VERMONT - SEPTEMBER 6: A person goes through a note pad while shopping for items at a Costco Wholesale store on Septemin Colchester, Vermont. It’s a nagging reminder that prices are unstable,” said Vincent Reinhart, a former Fed economist who now serves as chief economist at Dreyfus and Mellon. “It’s difficult for a central bank when oil prices rise. The same thing could happen in September. The rise in gas prices was the main reason headline inflation heated up in August. ‘$100 is just another number for the Fed’Īll of this uncertainty doesn’t make life any easier for Powell and the Fed. If Saudi Arabia and Russia don’t unwind their supply cuts by next year, Brent crude could hit $107 a barrel, Goldman Sachs recently said.Ĭitigroup told clients on Monday there is a chance that geopolitics pushes oil above $100 a barrel “for a bit.” However, the bank argued that “$90 prices look unsustainable” and predicted US oil will drop below $70 a barrel by the second quarter. Of course, much depends on what happens next in the turbulent oil market. How extreme heat is making your gas more expensive Lipow mostly blamed the recent price spike in California and neighboring states on a series of refinery outages.Ī person pumps gas at a gas station on Augin Austin, Texas. He pointed to sinking gasoline futures, “adequate” inventories of gasoline, cooling demand and the winding down of hurricane season.Įven California gas prices are “peaking” and should “start to moderate” as imported gasoline cargoes arrive, Lipow said. Thankfully, some energy veterans think gas prices may be at or near a peak.Īndy Lipow, president of consulting firm Lipow Oil Associates, expects prices east of the Rockies to drop by five to 10 cents a gallon in the coming days. “We would need much higher oil and gasoline prices for the consumer to crack,” said Joe Brusuelas, chief US economist at RSM. That would mean oil prices would need to spike all the way to $140, a level that not even the biggest oil bulls are calling for. “History says we are nowhere near having to worry about rising oil prices tipping the US economy into a recession,” Nicholas Colas, co-founder of DataTrek Research, wrote in a note on Tuesday.Ĭolas said history shows oil prices must double in a year or less before a recession is inevitable. The good news is that energy prices are not close to levels where they would pose an immediate risk to the US economy. However, Fed watchers say Powell is unlikely to overreact to near-$4 gas. Voters have a long history of blaming whoever is sitting in the Oval Office, fair or not.įor Federal Reserve Chair Jerome Powell and his colleagues, the recent rise in energy prices complicates their mission to tame inflation. Pain at the pump will only add to President Joe Biden’s political problems. It’s a highly visible reminder of the current cost of living.Īnd this recent rise in gas prices is causing headaches for some in Washington. The jump in gasoline prices is painful to consumers, especially lower-income families. In a bad omen for inflation, US oil prices top $90 a barrel for the first time this yearīoosted by those two nations’ aggressive supply cuts, US oil prices climbed to a 10-month high of nearly $94 a barrel on Tuesday before retreating below $91 on Wednesday.
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