As stated frequently in a research, there are two major factors responsible for Oil prices being efficiently capped around USD75-80 per barrel of Brent post the Oil war of 2014-16.There has been talks in the market recent that President Biden would be pleased to see the prices elevated taking his green agenda into consideration. As observed frequently, it is quite fascinating how rapidly such condescending philosophies disappear.
The first major aspect that is the increased prices of gasoline the low domestic consumer expenses-driven part of the country will grow. Particularly, the clear formula is this: for each cent that the U.S.’s average rate of gasoline increases, more than USD1 billion every year in optional extra consumer spending is lost. As an historic law of thumb, every USD10 a barrel alteration in the price of crude Oil ends up in USD0.25 variation in the price of one gallon of gasoline. The ‘red zone’ for U.S. presidents begins at approximately USD3.00 a gallon and USD4.00 per gallon they are being suggested avert the public’s attention. This is exactly the first aspect observed in the last week.
The second aspect responsible for Oil prices to stick around a fix price cap in place since the end of the Oil price war is political and is a result of the usually toxic financial effect on the U.S. economy of raising Oil rates. Particularly, in this matter, as per U.S. NBER statistics, after the end of World War I, the sedentary U.S. president achieved victory in re-election 11 times out of 11 when the nation’s economy was out of recession in two years post the election.
Yet, presidents who entered into a re-election movement with the economy in recession achieved victory only once among seven attempts. President Biden won’t have to face another presidential election for next four years. Taking last elections into consideration, the democrats acquired 222 seats, with 218 being majority to control, as it was 50 seats each for both Republicans and the democrats in the Senate, the Democrat vice-president righteously had a decision making vote.