Now what? White House looks for gas price strategy

Senior White House aides are exploring new ideas to respond to high gas prices and are looking again at some that they had previously discarded, desperate to show that the administration is trying to address voter frustration about rising costs at the pump.

Those efforts, though, come amid early signs of a broader slowdown in the economy, which could ease inflationary pressures but also lead to higher joblessness and slower growth. On Friday, oil prices suddenly dropped to a four-week low — a decline likely to push down gas prices — the latest indicator of a potential recession after the Federal Reserve raised interest rates this week to try to contain inflation.

The week’s staggering decline in the stock market — coupled with weaker-than-expected jobless claims and retail sales data — also reflects the risks in the central bank’s move to crush inflation by tightening monetary conditions. Wall Street recorded its worst week since March 2020, the early days of the coronavirus pandemic, as investors struggle to adjust to the Fed’s move.

Still, Biden officials are taking a second look at whether the federal government could send rebate cards out to millions of American drivers to help them pay at gas stations — an idea they examined months ago before ruling it out. Aides had found that shortages in the U.S. chip industry would make it hard to produce enough rebate cards, two people familiar with the matter said. White House officials also fear there would be no way to prevent consumers from using them for purchases other than gasoline, according to another person familiar with the discussions. Even if the administration embraces the proposal, it would probably require congressional approval and face long odds among lawmakers wary of spending more money.

Biden aides have also looked in recent days at invoking the Defense Production Act to move diesel and other refined products should localized shortages materialize, two people familiar with the matter said. Diesel prices have risen markedly, posing a major threat to the nation’s trucking and shipping industries, although experts say shortages appear to remain unlikely for now.

But energy markets hinted at the potential downsides of an economy that cools too quickly, with crude oil prices falling Friday. “The good news is that crude oil prices, which drive gas prices, had a big down day,” said Bob McNally, an energy official in the George W. Bush administration. “But the reason for it is a bad reason — that people are fearing a recession.”

Gas prices have been one of the most visible signs of inflation. The White House has taken actions to try to address the problem, such as committing to a historic release of the nation’s oil reserves and, on Wednesday, sending a letter to the nation’s refineries calling for more production.