Gas prices: Biden to allow fuel blend with up to 15% ethanol to be sold this summer
Yahoo Finance Live’s Akiko Fujita and Brian Cheung discuss reports that President Biden will allow fuel blend with up to 15% ethanol to be sold this summer.
Video Transcript
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BRIAN CHEUNG: Of course, the big headline this morning, inflation, inflation, inflation. Prices in the United States increasing by the fastest pace since 1981. On the headline number 8.5%, when you strip out food and energy 6.5% on that CPI. Akiko, prices continuing to rise in this country.
AKIKO FUJITA: Yeah, it's interesting to see those-- the moves we saw on those bond yields you just highlighted, Brian. When we saw that move on the back of this report, obviously, the headline number, it is the high-- the fastest gain that we have seen since 1981 but it does feel like investors finding a little relief in the core number, obviously, stripping out food and energy. And when you look at the number here, it is at 6.5% but 0.3% gain month on month compared to the 0.5% you saw the previous month. And you have to wonder if investors are looking at this saying, well, maybe those price increases, at least the rate of those increases are starting to abate.
BRIAN CHEUNG: Yeah. And for what it's worth, I mean, people are pointing to some specific components of this report to say it's possible this could be a peak. When you take a look, for example, at used cars and trucks, this has been a major component of focus through the inflationary figures that we've gotten since the middle of last year. Actually used car and truck prices decreasing by 3.8%.
But when you look across the board, it's not just gasoline and the commodities-related increases that were driving a lot of the March gains, that was certainly a big part of it. But all the adjacent categories have seen that bleed through as well when you take a look, for example, at airline fares up 10.7%. You and I have both noticed that as we had in our conversation with Helane Becker yesterday. So obviously, Akiko, commodities very much remaining a part of the picture. The Biden administration trying to pin this on the war in Ukraine. That has certainly had an effect, but look, we have to remember the inflationary pressures that we saw actually preceded the beginning of the Russia-Ukraine conflict at the end of February.
AKIKO FUJITA: Yeah. And Brian, you just talked about ticket prices going up obviously, we've heard from airline executives, including Robin Hayes over at JetBlue, talking about having to cut back on some of those routes because of the high fuel prices. But if you look at gas prices right now, things have started to come down. I was just looking at the numbers out of AAA today, the national average for regular gas is $4.09 a gallon. You compare that to $4.32, that's where we were a month ago. So that's some sign of relief. You know, whether that can be sustained is a whole other question.
And of course, as you said, the Biden administration really trying to get out in front of the messaging to say we are acting on this. And today we're going to see the president travel to Iowa to announce he's suspending this federal rule that essentially prevents the sale of gas blended with higher ethanol content. Average is about 10%, the president is saying that it can go to 15% this summer. You know, that's typically a time when that type of blend is not allowed quite simply because it's a dirtier fuel, it means more emissions, more smog. But the president saying that this move will enable gas prices to come down, the White House is saying about $0.10 a gallon.
BRIAN CHEUNG: Yeah. And for what it's worth, again, Brent and WTI, the price has come down over the last four weeks or so but it has not bled through to the prices that people are paying at the pump. But Akiko, I mean, just to kind of remove ourselves from the technical terminology of CPI year over year, month over month, I mean Americans are feeling this. And when I have conversations with my friends and my family, they're all noticing this. And the one thing they always point out is the increasing price of gas.
So even though you have some economists, I've seen so many notes in just the last 2 and 1/2 hours saying it's possible this could be the peak here but I could imagine a scenario where the headline CPI number comes down, maybe core CPI is going to come down actually faster because energy prices come back down. But at the end of the day, if people are still paying relatively elevated prices compared to where it was, let's say, a year ago, that's going to be a very painful pinch, especially on those lower-income households that spend a higher share of their income on these energy prices. So again, even if this is the peak on a number-wise basis, I feel like the issues that Americans are really concerned about is not necessarily going to abate immediately at that point in time.
