The national average price of gasoline was $2.38 per gallon when President Joe Biden assumed office, according to the Energy Information Administration, and increased to $3.53 per gallon by the start of the Russian invasion of Ukraine. Prices surpassed $5.00 per gallon in early June before subsiding to $3.92 per gallon as of Friday, according to AAA.
However, CNN Business senior writer Chris Isidore lauded the decline in gas prices without mentioning that costs remain highly elevated from the level seen less than two years ago.
“Next time you stop at a gas station, think of it as a $100-a-month tax cut. Or a maybe $100-a-month raise,” Isidore wrote. “The steady drop in gas prices over the last few months has turned into an unexpected form of economic stimulus, coming at a time when the Federal Reserve is trying to cool the economy and battle rising prices with higher interest rates.”
Isidore deduced that American households, which consume roughly 90 gallons of gas per month, are saving approximately $99 as gas prices fall $1.10 from their peak in June. However, Americans are truly losing $139 per month in light of gas prices remaining $1.54 higher since the beginning of the Biden administration.
“The impact of the extra cash could be a substantial boost to an economy that is showing signs of consumers pulling back on purchasing nonessential items, such as clothing, electronics and household goods,” Isidore continued. “No economic metric is more prevalent in public consciousness than the cost of gasoline, with signs on so many street corners advertising those prices.”
Moody’s Analytics Chief Economist Mark Zandi told Isidore that there is a “50-50 chance” that the economy will enter a recession within “the next year to 18 months,” even though he recently took a more optimistic forecast “because of falling gas prices.”
“Lower diesel prices bring down the cost of transportation for all goods, including food,” Zandi explained. “If you add in the indirect benefits, it’s real money.”
Yet Isidore fails to mention that the United States met the technical definition of a recession last month as the economy shrank at a 1.5% annualized rate in the first quarter and contracted at a 0.9% pace in the second quarter. Indeed, multiple White House officials likewise contended that the rule-of-thumb definition of a recession — two consecutive quarters of negative output growth — was insufficient to cast doubt on the state of the economy under Biden.
Meanwhile, senior members of the Biden administration have claimed that higher fuel prices have the silver lining of prompting more Americans to consume renewable energy.
“The real truth is that as long as our nation remains overly reliant on oil and fossil fuels, we will feel these price shocks again,” Energy Secretary Jennifer Granholm said in June. “This is not going to be the last time. The next time there’s a war, the next time there’s a pandemic or another hurricane, these extreme weather events we are experiencing — they will impact the access that we have to fossil fuels.”