Joe Biden will today call on Congress to suspend the federal tax on petrol and diesel for three months in a bid to provide some temporary relief to American households grappling with high inflation.
Petrol costs have soared to about $5 per gallon in recent weeks and consumer prices are rising at their fastest pace for decades, souring Americans’ perceptions of the strength of the US recovery and threatening Democratic chances in midterm elections later this year.
The so-called gas tax holiday would involve scrapping the 18.4 cent federal levy on every gallon of petrol, and 24 cent levy on diesel that consumers pay at the pump.
But critics say the policy could backfire, boosting demand and contributing to inflation, while failing to provide meaningful relief to families. There is also no guarantee that it would be approved by Congress.
The Biden announcement comes a day after the president hit out at Chevron chief executive Mike Wirth, calling the oil major boss “sensitive” after he criticised the US administration’s energy policy.
The president, who will meet oil company executives on Thursday, has increased his criticism of domestic producers in recent weeks. He said ExxonMobil was “making more than God this year” and told the oil supermajor to “start investing more”. He also criticised the industry’s elevated profits as “unacceptable” during “a time of war”, as conflict rages in Ukraine.
The president’s comments are part of a strategy to alleviate pressure at the pumps for US consumers. Earlier this year he ordered the biggest ever release of oil from the US strategic petroleum reserve and next month will travel to Saudi Arabia for talks with a regime he once considered a “pariah”.
The Biden announcement comes on the same day that the head of the International Energy Administration, a western energy watchdog, warned Europe to prepare for Russia to cut off exports of gas this winter.
“Europe should be ready in case Russian gas is completely cut off,” Fatih Birol told the Financial Times in an interview.
The briefing from the White House ahead of Biden’s announcement appeared to bring lower US oil prices. US West Texas Intermediate, the US benchmark, was down nearly 6 per cent earlier today at $104.15 a barrel. Brent crude, the international benchmark, was 4.5 per cent lower at $109.55 a barrel.
Thanks for reading FirstFT Americas. Here is the rest of the day’s news — Gordon
Five more stories in the news
1. Donald Trump pressed state officials to overturn election, committee hears Local officials described being put under intense pressure by the former president and his lawyers as part of a scheme to have him declared the winner of the 2020 election. Several witnesses at yesterday’s hearing described receiving death threats while another said he was deluged with 4,000 text messages after Trump tweeted his personal phone number.
2. Kellogg’s to split into three food businesses Kellogg is splitting into three public companies, keeping its core global snacks business while spinning off the North American cereal brands where the Cornflakes maker’s origins lie and a business selling plant-based foods.
Go deeper: The three-way split creates an opportunity for hungry private equity firms, argues the Lex column.
3. Exclusive: UK weighs move to force London IPO for Arm The UK government has debated using national security legislation to convince SoftBank to list Arm in London, as the Japanese investor reconsiders holding an IPO for the chip designer exclusively in the US.
4. Democrats question Reckitt Benckiser’s plan to sell baby formula unit Lawmakers are urging the top US antitrust enforcer to scrutinise a proposed sale of Reckitt Benckiser’s baby formula unit to a private equity firm, warning that it “could shallow out” the market during a national supply shortage.
5. Crypto exchange FTX bails out lending platform Sam Bankman-Fried has delivered his second bailout of a struggling digital assets firm in as many weeks. The 30-year-old chief executive of crypto trading platform FTX has extended a $250mn loan to lending platform BlockFi. It comes just a week after he helped crypto broker Voyager Digital to pull back from the brink.
More crypto news: Chen Boliang, a former senior manager at Huobi, one of the world’s largest crypto exchanges, is being prosecuted in Hong Kong after accusations that he made $5mn by secretly trading against a company account he controlled.
The day ahead
Fed chair testifies Federal Reserve chair Jay Powell begins two days of testimony in Congress by delivering his semi-annual monetary policy report to the Senate banking committee after the US central bank last week raised its main interest rate by 0.75 percentage points, its biggest increase since 1994.
Markets outlook Investors will be watching the Powell testimony closely as they assess the risks to the US economy and company earnings of rapid interest rate rises. Futures trading ahead of Powell’s appearance on Capitol Hill suggests US share gauges will open lower.
Earnings Canadian grocer Empire Co and US homebuilder KB Home will report before the bell. Empire is expected to report a profit of 69 Canadian cents a share on C$8bn ($6.2bn) in revenues. KB is expected to report earnings of $2.03 a share on $1.64bn in revenues. On Tuesday, US homebuilder Lennar surpassed consensus estimates despite rising mortgage rates.
International relations Saudi Crown Prince Mohammed bin Salman is scheduled to make his first visit to Turkey since the murder of Saudi columnist Jamal Khashoggi in Istanbul. The de facto leader of Saudi Arabia will meet Turkey’s president Recep Tayyip Erdoğan on the final leg of a Middle East tour that also took him to Egypt and Jordan.
What else we’re reading
The big mistakes of anti-globalisers Globalisation is not dead. It may not even be dying. But it is changing, writes Martin Wolf. From treating trade as optional to overstating the merits of self-sufficiency, Martin outlines the anti-globalisers’ big mistakes.
A corporate feud over satellites pits the west against China In February, European financiers and entrepreneurs gathered for a late-night online meeting to resolve a boardroom dispute over prized satellite permits. At its core was the question: who controls an asset in orbit? Here’s how a clash of cultures and geostrategic interests sank a German-Chinese joint venture.
Anarchy is a likelier future for the west than tyranny The story of our species is mostly one of disorder, not too much order. Even now, the state, a recent invention, is patchy and provisional in much of the world. Janan Ganesh argues that the trend of events is not towards strongmen but towards ungovernability.
How boards can keep up with climate action expectations HSBC’s bus stop adverts. BlackRock’s investment plans. BP and Microsoft’s carbon offsets. Green policy is turning into the fast-fashion of business strategy. Pilita Clark explains how to navigate this shifting landscape.
Regrets? We’ve all had a few but they can help your career In this week’s Working It podcast, senior business writer Andrew Hill talks to the bestselling author Daniel Pink. In The Power of Regret, Pink urges us to think differently about our workplace regrets and reframe our past to show us the path to a better future.
Books
Earlier this year, we published a rundown of private libraries around the globe. It promoted a flurry of responses regarding remarkable reading rooms. Here are some of your favourites.
Source: Economy - ft.com
