Gasoline prices in the United States fell below $4.90 on Monday as fears of an upcoming recession mount.
The price slashes come as crude oil costs have continued to decline in recent weeks amid ongoing concerns that a global recession may be looming.
The drop from historic highs reached after Russia’s invasion of Ukraine comes amid widespread concern over a global economic slowdown and a drop in demand owing to rising interest rates and inflation.
“Making appropriate monetary policy in this uncertain environment requires a recognition that the economy often evolves in unexpected ways,” Powell said. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook. And we will strive to avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time.”
‘Crude Choppy’His comments came after the Fed raised the benchmark interest rate by 75 basis points earlier this month.
Some experts believe more gasoline price drops might be expected in the future, which would ease some of the pain that Americans have been feeling at the pump.
“I think for gasoline, we go back above $5 and apocalyptic numbers come into play with hurricanes,” Kloza said. “The thing that people have to watch and is really insidious for inflation are the values for diesel and jet fuel. Stocks of those fuels are not building, they’re tight internationally and that’s where we’re going to have to pay the piper in the last 100 days of the year.”
Kloza noted that July will be the highest demand month and that any refining infrastructure that might get damaged through hurricanes could, in turn, push gas prices higher.
“July, without question, is the highest demand month,” Kloza added. “In July and August, we really have to cross our fingers that no refining infrastructure gets damaged by hurricanes or by the electric grid, which seems to be not incredibly stable in parts of the Gulf Coast.”
Meanwhile, the Biden administration has called on U.S. oil companies to boost production and asked lawmakers in Congress to suspend the gas tax for three months amid soaring energy prices.