Politics against the market: how Biden is trying to reduce prices

Politics against the market: how Biden is trying to reduce prices Gasoline in the US has fallen slightly in price, but the consumer still believes that $ 5-6 per gallon is very expensive. Even the sale on the open market of 260 million barrels of SPR did not lead to a decrease in the price of crude oil and fuel. The social explosion is still far away, but the political situation is very dangerous for the Democrats in Congress during the midterm elections in November.Pressure on the leaders of the oil and gas industryIt is still unknown what exactly the representatives of the seven oil companies promised at the meeting at the White House on June 23. Likely, BP (NYSE: BP), Chevron (NYSE: CVX ) and Phillips 66 (NYSE: PSX ) will increase production - this is a strong bearish factor.Moratorium on petrol taxCongress suspended the federal tax on gasoline ($0.18 per gallon) for three months and is calling on state governments to suspend regional taxes ($0.30 to $0.54 per gallon).Oil company contingency taxThe idea started its way through Congress, although such a policy has little effect on lowering consumer prices. But at the same time, oil companies will have less money that can be directed to exploration and production.Ban on the export of petroleum productsThe idea is only being discussed so far - Biden plans to meet with the heads of the largest refineries. Such a move could flood the US domestic market with diesel and gasoline, but in the medium term, it would cause a dangerous shortage and imbalance in the global oil market.Jones Act suspendedThis mechanism is effective for domestic consumers: gasoline and diesel prices on the east coast are reduced due to reduced transportation costs. Biden's policy has not yet given a serious effect, and a little more than four months are left before the elections. If domestic prices do not fall by 40-50%, it will be necessary to conclude a new deal with oil companies with more stringent conditions. Wait and see.Profits to yall!