- A record nobody wanted. The average price of a gallon of gasoline during Donald Trump’s second term will top $3.46 on Nov. 2, beating the previous record average set under Joe Biden, according to an FT analysis of federal data.
- Pump prices have surged. Gasoline costs have risen more than a third since Trump returned to office in January last year, to $4.17 a gallon on Sunday according to AAA, though still below Biden’s daily peak of $5.02 reached in 2022.
- Diesel is the bigger problem. Diesel has risen more than 70% during Trump’s second presidency to $6.30 a gallon, after a record $6.53 in September, and its average since he returned to office has reached $4.339, above the Biden-era level of $4.076, FT calculations of EIA data show.
- Inflation is feeling it. The Personal Consumption Expenditures price index rose at an annual rate of 3.6% in September, versus 2.6% before Trump took office, and a recent FT survey found 56% of voters said they were financially worse off under Trump.
What Happened?
Fuel costs have surged since the US launched its war against Iran in February, with Iran largely blocking oil shipments through the Strait of Hormuz for much of the year and the conflict damaging refineries and energy infrastructure across the Middle East. Ukrainian strikes on Russian refineries have added to the supply strain. The White House argues the war was necessary and that prices will plummet once it ends, and an official noted that, adjusted for inflation, prices were higher under Biden.
Why It Matters?
High fuel prices feed directly into inflation and the Fed’s rate outlook, and they have become a major liability for Republicans heading into Tuesday’s vote. “High energy prices are a key driver of the affordability concerns that are going to be top of mind for people at the polls,” said Columbia University’s Jason Bordoff. Rapidan Energy’s Bob McNally called the surge “a sudden tax increase that the voter didn’t consent to and Congress didn’t vote for.” On Friday, Exxon and Chevron warned the diesel crisis was here to stay as they reported near-record profits worth a combined $25.3 billion.
What’s Next?
Three tankers are scheduled to unload a combined 140,000 tonnes of Russian diesel at US ports days after the midterms under a temporary sanctions waiver, but analysts expect little short-term price impact given the small volumes. “Probably very little of this diesel is going to come to the US because Russia doesn’t have much diesel to sell,” said Rachel Ziemba of the Center for a New American Security. Watch the midterm results, Iran diplomacy and Friday’s jobs report for the inflation and rate outlook.
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Source: Financial Times
