- Published
Prices for gasoline and diesel have more than doubled since the US-Israel conflict with Iran began in February, affecting transport businesses, farmers and anyone who drives a vehicle in America.
asserted
who → publish → America
Ahead of the critical midterm elections, there have been growing calls for more to be done to reduce the price of fuel, and US President Donald Trump has made several comments and announcements aimed at getting costs down.
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costs → grow → comments
The question is: what is he able to do with just a few weeks to go before election day - and will it work?
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it → do → day
Why does Trump want to reduce gas and diesel prices?
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Trump → want → prices
Trump's announcement of a waiver on the use of red dye diesel at a campaign stop this week underscored the importance of gas prices in a midterm election dominated by affordability issues.
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announcement → underscore → issues
The election comes as there is widespread public concern over the rising costs of fuel, food and other goods.
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election → come → fuel
Voters have tied the issue to Trump and his party, weighing down Republicans running in November.
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Voters → tie → November
Polls show a majority of Americans disapprove of Trump's handling of the economy and the war in Iran, which has contributed to high diesel and gas prices in the US.
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which → show → US
Global oil supplies have been restricted since the conflict in the Middle East effectively halted the usual flow of oil and refined products through the Strait of Hormuz for months.
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conflict → restrict → months
While the flow of crude oil is nearly back to pre-war levels the price remains above $100 a barrel, and sustained high oil prices have had a knock-on effect for diesel and gasoline.
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prices → remain → diesel
David Ruisard, pricing manager for commodities intelligence firm Argus says the ongoing Russian war with Ukraine has also impacted oil supplies, contributing to higher fuel prices.
"Our estimates are that your price increase from about $3 a gallon up to $6 a gallon [for diesel] is 60% connected to the Strait of Hormuz, 40% connected to the Russia-Ukraine conflict," he says.
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he → say → conflict
Those higher energy prices are responsible for most of the uptick in inflation this year, Oxford Economics chief US economist Michael Pearce says, which is pushing up interest rates.
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which → say → rates
"The combined impact of higher rates and higher energy prices is squeezing household budgets and adding to firms' costs," he says.
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he → squeeze → costs
While prices remain high, Patrick De Haan, head of petroleum analysis for fuel price tracking website GasBuddy said there have been modest declines recently for both gasoline and diesel.
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Haan → remain → gasoline
"A lot of that is likely due to some of the manoeuvres that we've seen the Trump administration employ over the last couple of weeks," he said.
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he → see → weeks
What has Trump done so far?
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Trump → do → What
The president announced this week that he would allow so-called red dye diesel - fuel which is used off-road and does not face federal taxes - to be used on US highways without facing federal levies.
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which → announce → levies
Ruisard said the only difference in the diesel used by truck drivers and everyday consumers and the tax-free red dye diesel is the dye itself.
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difference → say → drivers
"The problem with that red dye is, it's extremely hard to clean it out of your tank," he explained.
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he → clean → tank
The problem that creates is what happens to trucking companies that use the dyed diesel once the temporary tax relief ends, he said.
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he → create → diesel
"The fines are pretty high for having that in your fuel tank because its considered tax evasion."
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its → have → tank
The other issue with expanding the use of red dye diesel, according to Ruisard, is that people and businesses - including rail operators - usually set aside a particular amount of the product.
uncertain
people → expand → product
"If suddenly people go out and they start consuming that diesel, that depletes their available supply as well," he said.
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he → go → supply
But another move from Trump has been more successful, according to analysts.
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move → accord → analysts
Last week, the G7 countries announced they would release 100 million barrels of oil and diesel from stockpiles to ease supply concerns, following pressure from Trump to do so.
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they → announce → Trump
De Haan says the announcement itself – regardless of how much has been released so far – "has worked to push prices down to some degree".
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much → say → degree
Economist Pearce agreed but warned the release is only a temporary solution.
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release → agree → ?
"As long as energy exports from the Gulf remain disrupted, stocks will need to be drained further to supply the market," he said.
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he → remain → market
"And the need to refill those stocks will mean energy prices remain elevated for a period, even when disruption in the Middle East clears."
What else has the president suggested?
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president → refill → What
Earlier this week, Trump said he was "thinking about" suspending federal tax on gasoline.
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he → say → gasoline
De Haan said the president has also been imploring states to cut state taxes on gasoline and several have done so, including Ohio and Georgia.
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several → say → Ohio
State taxes form a "moderate portion" of what consumers pay at the pump, and those reductions have helped reduce prices and national averages, he said.
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he → form → prices
However, suspending or reducing the federal levy on gasoline would require the cooperation of Congress.
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suspending → suspend → Congress
"That may be difficult to obtain ahead of the midterm elections," said De Haan.
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Haan → obtain → elections
De Haan estimated that in Indiana, which cut its tax on gasoline in May, it has cost the state government $1bn (£760m) in lost revenue.
uncertain
it → estimate → revenue
Trump has also previously supported calls for a ban on diesel exports from the US.
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Trump → support → US
While that would provide partial relief in the Gulf and Midwest, according to Pearce, he adds it would be of "little benefit" to the Northeast and West Coast.
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it → provide → Northeast
"The policy risks backfiring because it would result in stockpiling of diesel, and as that storage runs out, refineries would need to cut back on production," he said.
"
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he → risk → production
That would raise prices of other energy products, including gasoline."
Does Trump have any other levers to pull?
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Trump → raise → levers
De Haan believes the president has "basically pulled all of the small levers that a president can pull, and we're still seeing prices very elevated".
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prices → believe → that
…and 5 more, not listed.
The Aporia
