The United States has no idea how to deal with the shocking increases in oil and energy industries.
It remains unknown how the U.S. government will deal with the shocking increases in oil prices and energy prices as well.
The February consumer indexes were released last week, revealing numbers that the least thing you can say about is that they are alarming. Grocery prices have risen, as have goods prices and energy prices.
U.S. consumers are facing the threat of inflation and the long-term economic effects of the current war in Europe. According to last week’s report, wheat and corn prices had increased significantly.
Corn has now increased by 22% and it could reach 30% by next month. Wheat prices jumped by 37%. which made a lot of average American buyers feel angry about the current price increases. Investors demand a quick and effective solution from the Federal Reserve as we enter the second week of March.
In his latest speech to the nation, Biden suggests that to fight inflation, the U.S. must produce its own products, increase its labor force, and decrease its importers. Does that mean that the U.S is taking another economic approach?
Since the start of the Ukrainian war, the U.S dollar has risen in value relative to its European counterpart, the euro. Part of the U.S sanction against the Russian military invasion is to stop importing Russian oil. Yet, it’s clear that the world’s leading oil exporters can’t produce more than 400,000 barrels a day. The OPEC members have decided that all members are not ready to increase more than that amount a day.
In light of the increasing demand for oil, plus the decreasing barrel supply, traders are worried about a global economic recession.
The Federal Reserve president, Jerome Powel, says that the war between Russia and Ukraine won’t delay the federal interest hikes. The first lift will be taken in late March, as Powel said, yet it’s unclear how fast and aggressive it will be. Powel guaranteed that the first interest rate hike would be 25 basis points, but that this would change due to recent events and the oil crisis.
Experts believe that the U.S economy can resist only six months of oil prices above an average of $125. Yet there will be negative effects, especially on the labor force. Nonfarm payrolls delivered outstanding results last month, but all of that is under threat of inflation and rescission.
The U.S and its allies suggested that the OPEC members produce more than 410,000 barrels a day, yet the response was not as they hoped. The oil cartels, or the OPEC plus, declined that suggestion and responded that they would keep their production based on their agreement in July of last year.
It was intended to be a short-term solution because global oil demand and prices are rising. Yet, there are other alternative solutions for the U.S, especially for gas importers. Now the U.S. may join a negotiation with Algeria to be its natural gas supplier instead of Russia. In terms of whether this is true or not, it’s uncertain, and no official statements have been made.
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