Oil prices continue to rise and become unbearable pain for Americans

The worst inflation in the United States in 40 years and the high cost of consumption caused by the tight energy supply of the world have caused the price of gasoline in the United States to continue to rise, which has become an unbearable pain
for Americans.
Although the Biden administration has tried to reduce gasoline prices, it has not had much
effect so far.
The tight situation of world energy supply will continue, and the outcome of the Russia-Ukraine conflict is still unknown, but the global energy pattern has undergone profound changes
.

In recent days, the national average gasoline price in the United States has reached a record high
.
In California, gasoline averages $6.
05 a gallon, up from $4.
135 a year ago; gas stations in eastern Washington are sold out, and some are currently fuel-only
.
According to the U.
S
.
Energy Information Administration (EIA), the average U.
S.
household will spend $2,945 on gasoline in 2022.
If gasoline prices continue to climb next year, U.
S.
household gasoline spending could increase to $
5,000.

The continuous rise in gasoline prices has become an unbearable pain
for Americans.

The main reasons for the continued rise in gasoline prices lie in two points
.
One is that the United States has suffered the worst inflation in 40 years; The second is the high cost of consumption due to the tight supply of energy in the world
.
For the first time in years, West Texas Light crude was flat with Brent crude prices, both above $
110 a barrel.

Although the Biden administration has tried to reduce gasoline prices, including releasing the Strategic Petroleum Reserve, requiring Gulf oil producers to increase production, and intentionally easing sanctions on Venezuela and Iran in exchange for more oil supplies, it has not achieved much
so far.
Seeing that the midterm elections in the United States are imminent, if the momentum of rising gasoline prices cannot be curbed, the prospects of the medium-term elections are worrying
.

Some estimates suggest that in the United States, assuming a $10 price per barrel of crude oil rises, gasoline prices rise by 25 cents per gallon, and that for every 1 cent increase in gasoline prices, household spending in the United States decreases by $1 billion
.
The data shows that while the US consumer market remains strong, the University of Michigan consumer confidence index continues to be weak
.
Among them, the consumer confidence index in May was 58.
4, down from 65.
2 in April and well below economists' expectations
.
It can be seen that gasoline prices have a great
impact on the US consumer market and economic society.

Because oil prices are at stake, it is reported that US President Joe Biden has to "put aside his past differences" with Saudi Arabia and will meet
with Saudi Crown Prince Mohammed bin Salman.
The two people had shouted in the air many times, but because the words were not speculative, they once made a fuss and did not answer the phone
.
At the same time, the US Senate also cooperated in a "double reed" - passing the "Oil Production and Export Cartel Prohibition Act" (NOPEC) in an attempt to put pressure
on OPEC.

The White House has been urging Saudi Arabia and the United Arab Emirates to increase crude oil production
.
Especially since the outbreak of the Russian-Ukrainian conflict, the United States and the European Union have repeatedly tried to persuade OPEC to increase production without success, and have instead looked for alternative oil and gas resources
around the world.

The tight situation of world energy supply will continue, and the outcome of the Russia-Ukraine conflict is still unknown, but the global energy pattern has undergone profound changes
.
The EU's determination to "decouple" from Russian energy supplies may take several years of transition, but the effects are already beginning to be felt
.

At present, the US LNG is entering the European market, but it also faces many difficulties
when it is making a fortune.

First of all, the Russia-Ukraine conflict has disrupted the global crude oil and refined oil supply chain, especially the US and Western buyers no longer import Russian vacuum gas oil and other refined intermediate products, and the global refinery capacity has been affected
to varying degrees.
U.
S.
refinery capacity is now at its lowest level
since 2015.
Local analysts said that U.
S.
fuel prices continue to hit new highs, directly due to insufficient refining capacity, so there is no quick fix
.
In the last two years, the U.
S.
has permanently shut down about 1 million b/d of refining capacity, with some of these refining facilities converted into biofuel production bases
.

According to the U.
S.
Energy Information Administration, U.
S.
refining capacity in 2021 was about 18 million b/d, the lowest level since 2015, and capacity continued to decline
this year.
In terms of inventories, statistics as of early May showed that the national distillate stocks, including diesel, stood at 104 million barrels, about 23% below the five-year average and the lowest level
since 2008.
Market participants believe that extremely low inventories of petroleum products in the United States and a shortage of refining capacity will trigger a fuel crisis
in the summer.

Worldwide, there is a general shortage of refining capacity
.
Saudi Crown Prince Salman believes that the lack of investment in global refining capacity is one of the key drivers of
higher gasoline, diesel and jet fuel prices.

Second, how the United States solves the inflation problem has attracted much attention
.
The Biden administration has made tackling inflation a top priority
of its domestic policy.
For now, the Biden administration seems to be betting on raising interest rates
.
In addition, the US government has tried to curb inflation by lowering oil prices and improving supply chains, but with little
success.
For example, the United States currently releases 1 million barrels per day of strategic petroleum reserves, about 1% of global demand, for a total release of 180 million barrels, and with the two previous releases, the United States is expected to release a total of 260 million barrels of crude oil
.
This unprecedented summarization has also failed to curb the rise
in oil prices.

According to Labor Department data in May, inflation in the United States was 8.
3% in April, down slightly from 8.
5% in March, but still at a 40-year
high.
Federal Reserve Chairman Jerome Powell said a few days ago that he will continue to tighten monetary policy until he "sees inflation fall back in a clear and convincing way.
"
Record diesel and gasoline prices are threatening economic growth, further adding to inflationary pressures
in the United States.
The Fed's fight against inflation is further complicated by the fact that diesel prices affect all parts of the economy, as larger rate hikes could lead to worsening economic activity and household spending, and eventually a recession
.

Most economists and analysts believe that it will be difficult to eliminate the worst inflation in 40 years, and that if the Fed takes too much medicine, it may risk the economy falling into stagflation or even recession
.
Goldman Sachs issued a warning urging the business community and consumers to prepare for
the prospect of a recession in the U.
S.
economy.
Some analysts believe that the effect of curbing inflation through continuous interest rate hikes will take a long time to appear, because the impact of monetary policy on the economy is lagging, usually between 9 months and 1 and a half years, so the US economy may fall into recession
in 2023.
However, if the US economy turns downward, oil demand will also be suppressed
.

Third, there is greater uncertainty in global oil supply, and oil prices are expected to remain high
.
U.
S.
oil and gas exports have reached record highs this year, and major energy companies have made a lot of money
.
While helping to ease Europe's energy crunch, America's own inventories are shrinking
.
U.
S.
oil inventories have plummeted by 421 million barrels
since July 2020, data showed.
The U.
S.
became a net exporter of crude oil and fuels in April, with a balance of 3 million barrels per day, most of which comes from stockpiles, so inventories have now fallen to their lowest level
since 2008.

Lower inventories will affect the ability of the United States to
fill the Russian oil gap.
More noteworthy, though, is the link between
U.
S.
oil export growth and rising domestic fuel prices.

Although oil prices have been rising, domestic oil production in the United States has slowly increased, and the reasons for this are intriguing
.
Some analysts believe that despite the price increase, investors are still skeptical of the oil industry, resulting in the latter lacking enough funds to invest in new equipment to cope with higher demand
.
The world's oil majors are busy buying back shares and paying special dividends, but they are not interested in
increasing production.

In addition, some people attribute the sluggish investment in the US oil industry to the Biden administration's climate policy, and the one-sided pursuit of new energy is also one of the reasons for the great uncertainty of
current energy supply and demand.