Yellen: ‘Virtually impossible to insulate ourselves’ from soaring gas prices
Treasury Secretary Janet Yellen said American consumers will be at the mercy of oil companies this summer as crude oil is expected to reach $160 a barrel, according to an analysis released Monday by Goldman Sachs.
Speaking to the Senate finance committee Tuesday, Yellen took heat from both Republicans and Democrats for inflation that’s near 40-year highs, with gasoline prices up almost 50 percent over the last year.
In May, a gallon of gas cost more than $4.50, according to a national average compiled by U.S. Energy Information Administration. It’s now at $4.86 a gallon, up 25 cents in just one week.
In California, gas is now more than $6.30 per gallon, and it’s above $5 a gallon in 10 states.
Crude oil is trading now at more than $117 a barrel on the New York Mercantile Exchange, up nearly 70 percent from around $70 a barrel this time last year.
“Given the global nature of these markets, it’s virtually impossible for us to insulate ourselves from shocks like the ones that are occurring in Russia that move global oil prices,” Yellen said.
The former Federal Reserve chair received criticism last week when she said during an interview on CNN that she had been “wrong” about the trajectory of inflation — which many analysts had deemed “transitory” — but has proven to be a much more persistent feature of the economy in the wake of the coronavirus pandemic.
Inflation has caused the most pain at the gas pump, where consumer energy prices have risen more than 30 percent in the last year. This figure is more than three times the increase in consumer prices generally, according to the latest measure by the Department of Labor.
Those hikes in the energy sector aren’t showing any signs of letting up, according to the most recent forecast from investment bank and research firm Goldman Sachs.
“Updating our supply and demand expectations, we now forecast that Brent [crude] prices will need to average $135 [per barrel]” for the second quarter of 2022 through the first quarter of 2023, “up $10 [per barrel] vs. prior forecast,” Goldman researchers wrote in a June 6 note.
“This represents summer retail prices reaching levels normally associated with $160 [per barrel] crude prices (due to strong refining utilization, gas prices and USD),” the note said.
Despite high gas prices, “people are still fueling up,” said Andrew Gross, a spokesperson for auto service AAA. “At some point, drivers may change their daily driving habits or lifestyle due to these high prices, but we are not there yet.”
This is a developing report and will be updated.
Source: TEST FEED1
