The Biden administration banned Russian oil imports to the US. What could the administration do to lower gas prices in the US?

Strong economic recovery coupled with low investment in oil production were hugely exacerbated by the Russian invasion of Ukraine. This sent the oil price to stratospheric levels and this is being passed over to consumers at the pump.

In the short term, if the administration wanted to lower gas prices, there are some mechanisms to unlock. These include decreasing or suspending federal taxes on gasoline and diesel that are 18.4 and 24.4 cents per gallon, respectively. It could also work with state governments to do the same. State taxes average 30.63 and 32.29 cents per gallon, hence combined gains could amount to $0.5 per gallon.

Another option could include releasing more from strategic reserves to the market. However as recent and previous actions show, this would have only short-lived and limited impact on prices. What is released today will need to be replenished in the near future.

In the longer term, a more supportive approach to increasing domestic and international production would help. But most importantly, the key to the energy transition is in consumers’ hands. The biggest shift will need to happen on this side of the equation.

Again, it is hard to predict which way the situation and markets will go, however it seems that we are poised for a period of high energy prices that are driven by war and combined with tight market fundamentals.

High prices are being passed over to consumers at the pump, in their gas, heating and electricity bills. And high energy prices contribute to increased cost of virtually all goods and services further fuelling inflation expectations. High energy prices contribute to increased cost of virtually all goods and services further fuelling inflation expectations.

Crude oil on Wednesday traded at nearly $105 a barrel, up from about $60 a year ago. High oil prices have not coaxed more production, creating a challenge for Biden. President Joe Biden is preparing to order the release of up to 1 million barrels of oil per day from the nation's strategic petroleum reserve, according to two people familiar with the decision, in a bid to control energy prices that have spiked as the U.S. and allies have imposed steep sanctions on Russia over its invasion of Ukraine

The announcement could come as soon as Thursday, when the White House says Biden is planning to deliver remarks on his administration's plans to combat rising gas prices. 

Read the special news from AP on Yahoo News at:

https://news.yahoo.com/biden-planning-tap-oil-control-003858440.html