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What declining gas prices could mean for the Biden administration

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Yahoo Finance columnist Rick Newman details the impact declining gas prices may have on voters ahead of the midterm elections, in addition to inflation concerns.

Video Transcript

[MUSIC PLAYING]

SEANA SMITH: Americans finally seeing some relief at the pump. And it could be some good news for the Biden administration too. Yahoo Finance's senior columnist Rick Newman is here on-set with us to explain. And Rick, we've talked a number of times about how important gas prices are to voters. Clearly, this is good news here for the Biden administration. Is it enough though, because that's a big question?

RICK NEWMAN: Well, it depends what happens. So the news here is that the Biden administration did a briefing today. And they are kind of predicting that gas prices are going to fall another $0.50 per gallon from where they are right now. So right now, about $4.65 a gallon. And they don't know anything that nobody else knows. All they're doing is looking at the wholesale price. There's a lag between the wholesale price and the retail price. But the wholesale price has been coming down. And that was before what happened today.

I mean, oil prices down another 8% today. So that is going to bring-- I mean, that's great news for drivers. So I looked at WTI just before I walked out, $95. I don't know if it's going to stay there because the Russian war is a real problem that is pushing up oil and gas prices. But if it stays there, we could see gas prices coming back close to $4 by-- I don't know-- August or the beginning of September.

RACHELLE AKUFFO: And obviously, that's keeping a lot of people wondering what this means in terms of politics. Yesterday, we were talking about President Biden and the Democrats looking perhaps to have a different candidate on the ticket in 2024. But now we're seeing a poll showing that half of Republicans don't want Trump to run in 2024. What's happening?

RICK NEWMAN: OK, there's no way I can make a connection between gas prices in July of '22 and who the presidential candidates are going to be in 2024. I mean, I guess it's interesting to have this conversation and do the horse race thing two years ahead of time. Who's going to run?

Democrats apparently don't want Biden to run for re-election. Now another "New York Times" poll shows Republicans don't want Donald Trump to run for re-election. I don't think any of this is surprising. These are two old guys.

And voters are sick of the old guys. They want younger, newer, fresher candidates, which I think makes perfect sense. A lot's going to happen before 2024. I don't know if gas prices are going to be the biggest deal in '24 or something else. We've got to get this war in Ukraine finished before, I think, we get to talking about that.

DAVE BRIGGS: I thought the headline was a little deceiving in that "New York Times" piece because, yes, 49% of Republicans don't want President Trump to run, but he is still the leader. He is still the overwhelming favorite for the GOP nomination, 49-25 against Rick DeSantis. So yes, some say that people are tired of him, but he is easily the front runner for the nomination in '24.

But I want to circle back to the call that the White House had about inflation. Presumably, is that priming the pump for a bad number on inflation--

RICK NEWMAN: Yeah.

DAVE BRIGGS: --overall? Hey, look, gas prices are coming down--

RICK NEWMAN: Yes.

DAVE BRIGGS: --when we get hit with an 8.8% tomorrow?

RICK NEWMAN: Yeah, that's exactly right. Now, they did say on this briefing-- we have not seen the inflation report. We don't know what it's going to be. I take them at their word on that. But economists are saying it could be higher still than we saw in the last reading, which was 8.6% annual inflation. You're right, a good prediction is 8.8%.

So what the White House is trying to say is, as far as the energy component of that, that is based on prices in June, which is when gas prices actually peaked. The peak gas price was $5.02. That was around the middle of June. And that's going to be what's reflected in the CPI report tomorrow.

Now, we do know gas prices are lower. They are about $0.35, $0.40 below that level right now. So in that regard, it's lagging. If they're right, if the White House is right about this, that means the good news is going to come in the inflation report for July, which will come in the middle of August because that will reflect declining gas prices.

And by the way we're also seeing declining prices for commodities and other components at the wholesale level, which does suggest we are-- I don't know if we've hit the peak of inflation. But we could be right about there.

SEANA SMITH: Yeah, and Rick, Biden has been criticized, even from members of his own party, just in terms of the messaging. They need to change the messaging when it comes to inflation. We've seen him do things like he did today, try to get out ahead of that news. But do you think that will be enough?

RICK NEWMAN: No. I don't think there is any good messaging when inflation is, let's call it, 9% and when gas prices are $5 a gallon. I don't know how you can message your way out of that problem. You just have to get inflation down. And we know that's not the job of the president. It is the job of the Federal Reserve.

It's also true-- I mean, Biden has overstated this. But it's definitely true that the Russian war in Ukraine has added $20, let's say $30 to the price of a barrel of oil. That is reflected in gas prices everywhere in the world. I mean, I've made the case that the one thing Biden could do that would most help bring oil prices down by a lot is beat the Russians on the battlefield in Ukraine. End that war as fast as you can. But you can't do that fast either. So there's just not a lot Biden can do.

I think what Democrats want is they want him to be more intense. They want him to be more of a fighter. And he talks the talk sometimes, but it's just not his personality. He's not combative. He's a nice guy. He doesn't go around insulting people just to get likes on Twitter. So that's how we got as president.

DAVE BRIGGS: Got to have a fighter. And that's why, probably, Gavin Newsom got traction with that ad because it was some spite. It was some spunk that we've been looking for.

RICK NEWMAN: We can talk in the future about Gavin Newsom versus Ron DeSantis.

DAVE BRIGGS: That'll be interesting, boy.

SEANA SMITH: Yeah, that'll be a good one.

DAVE BRIGGS: I'll tell you what.

RICK NEWMAN: We are getting ahead of ourselves.

DAVE BRIGGS: We are, way ahead of ourselves.