Janet Yellen admits there is a “risk” that US gas prices could rise again this winter

Treasury Secretary Janet Yellen acknowledged there was a “risk” US gas prices could start to rise again this winter after months of steady declines.

Yellen pointed to potentially tense conditions in Europe as European Union members halt Russian oil supplies and consider imposing a price cap in response to the brutal invasion of Ukraine.

“It’s a risk, and it’s a risk that we’re trying to address at the price cap,” Yellen said during an appearance on CNN’s State of the Union on Sunday. “This winter, the European Union will largely stop buying Russian oil, and it will also ban the provision of services that allow Russia to ship oil by tanker. It is possible that this could lead to an increase in oil prices.”

“Our price cap proposal is designed both to reduce Russian revenue, which they use to support their economy and fight this illegal war, and to maintain Russian oil stocks to keep global oil prices low,” Yellen added.

Janet Yellen
Janet Yellen said the US economy is not in recession.
Gas prices have fallen since hitting record highs in June.

After jumping to an unprecedented national average of more than $5 a gallon in June, gas prices fell to $3.716 a gallon on Monday, according to AAA data. Even after nearly three months of decline, prices are still higher than a year ago when the average cost of a gallon of gasoline was $3,175.

Gas prices fell in recent months as oil prices fell in response to investor fears of a looming global recession.

While the European Union enacted a ban on Russian oil imports by sea, effective December 5, Germany and other nations continue to rely heavily on these supplies to heat and light their homes. The standoff has sparked concerns about a European energy crisis that could lurch global prices.

“We’re not in a recession,” Yellen said. “The labor market is exceptionally strong, and the unemployment rate is extremely low. There are almost two job offers for every job seeker. We have seen a historically rapid recovery in the labor market, with around 10 million jobs created since President Biden took office.”

President Biden and other administration officials have repeatedly embraced falling gasoline prices, arguing that strategic reserve releases and other efforts have eased the pain of American motorists.

But a further rise would provide fresh fodder for other Republican critics, who have questioned whether the administration’s victory round was premature given weak macroeconomic conditions surrounding the Russia-Ukraine war.

Yellen also reiterated her long-held view that the US economy is not in recession, despite two quarters of contracting GDP. Cabinet member Biden cited an “exceptionally strong” labor market as a sign of the health of the economy.

Gas prices have fallen below $3.80 a gallon.
Gas prices have fallen below $3.80 a gallon since summer highs.

Still, Yellen conceded that a recession “is certainly a risk we’re watching.” She noted that the Federal Reserve faces a difficult path to a so-called “soft landing,” or successfully lowering inflation without a significant impact on jobs or economic growth.

“It will take a lot of skill and a bit of luck for the Fed to achieve what we sometimes call a soft landing,” Yellen said.

“I believe there is a way to achieve that,” she added. Janet Yellen admits there is a “risk” that US gas prices could rise again this winter


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