- Ben Bernanke says there's nothing the Federal Reserve can do about rising gas prices.
- To intervene would be to risk "derailing growth entirely," said the Federal Reserve chair.
- Bernanke predicts that "gas prices will not continue to rise at the recent pace."
WASHINGTON — Consumers upset about rising gas prices won't be getting relief any time soon from the Federal Reserve, the central banking system of the U.S. charged with maintaining the stability of our financial system.
There's nothing the Federal Reserve can do about rising gas prices "without derailing growth entirely," said Federal Reserve Chairman Ben Bernanke this week in the central bank's first-ever press conference.
"This is a very adverse development," Bernanke said. "It accounts for almost all of the inflation. There's not much the Federal Reserve can do about gas prices, per se, without derailing growth entirely.
"The Fed cannot create more oil. What we can do is basically try to keep higher gas prices from passing into other prices and wages, and creating a broader inflation that would be harder to extinguish. Our view is that gas prices will not continue to rise at the recent pace. That will provide some relief on the inflation front."
Bernanke's subdued approach to fighting rising gas prices stands in stark contrast to the reaction from the Obama White House, which has kicked off a Justice Department probe into the issue.
The cost of a gallon of regular gasoline rose 18 percent in the first three months of 2011, according to AAA, with the price reaching a national average of $3.88 a gallon on Thursday. A year ago, the price stood at $2.86 for a gallon of regular gasoline.
In the meantime, Royal Dutch Shell's profits rose 30 percent in the first quarter amid high oil prices, according to Bloomberg. Exxon Mobil Corp. will reports its profits on Thursday. Analysts are expecting them to surge, Reuters reported.
Along with oil company shareholders, there is a voice within the business community that sees higher fuel prices as a positive development. A March Harvard Business Review blog entry by Matthew E. Kahn, a professor at UCLA's Institute of the Environment and Sustainability, titled "Celebrating $4 Gas," contends that more expensive gas "offers safer roads [and] lower climate impact....
"A universal adoption of scaled-down private vehicles would increase street safety," Kahn writes, advocating for the smaller, more fuel-efficient vehicles that consumers are expected to buy in greater numbers whenever gas prices remain high for a sustained period.
Inside Line says: Bernanke, the nation's top money guy, basically tells us to grin-and-bear-it when it comes to high gas prices. Are you buying that? — Anita Lienert, Correspondent
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tbone85 says:
05:02 PM, 05/02/2011
"Maybe if the fed wouldn't have the printing press running at full steam for 28 hours a day our money would actually be worth something and the prices of oil would at least stay somewhat stable."
Have a chart somewhere that shows the value of the dollar as a determinant in the price of oil? The vast swing in oil prices can not be explained by movement in the dollar. The price of oil is being influenced far more by demand increases and speculators.
rpvitiello says:
09:46 PM, 04/30/2011
@higcorners How much lower would you like the gas tax? The US already has one of the LOWEST gas taxes in the world for a first world country. As it is the highways in this country are a mess, you want to cut funding even more on roads that are literally collapsing, not to mention massively over crowded just so gas would be a few cents a gallon cheaper? Besides the second the US government lowered gas tax, the oil companies would raise prices by the tax cut and pocked the extra money.
IMO the gas tax needs to be raised, and the money needs to be use to fix the roads, and curb consumption. Once that happens prices MAY go down.
ambee514 says:
07:00 AM, 04/30/2011
Maybe if the fed wouldn't have the printing press running at full steam for 28 hours a day our money would actually be worth something and the prices of oil would at least stay somewhat stable.
openeyes1 says:
09:27 PM, 04/29/2011
@tdiluv; We can all make a difference, by using less gas, we can't control global speculation, but we can control how much fuel we consume. Our nation is getting increasingly obese, its costing this country Billions in health care cost, nows the time to pick up a bike or a pair of walking shoes.
etanretla says:
02:17 PM, 04/29/2011
what exactly is the basis for the surge and ever fluctuating price of oil?..isnt it mostly based on pure speculation?..nobody knows how much oil there really is underground, so how can oil prices be based on supply?..with oil being the basic/constant ingredient to probably most material things being produced, there is a sort of a moral and fair responsibility by companies that provide it...at least thats what we all hope it to be...but greed is also a large compenent of being human...so one day, dont be suprised if someone figures out a way to control oxygen and charge everyone for breathing it!
openeyes1 says:
10:18 AM, 04/29/2011
@e90_m3; Excellent Post!
@dgmail; Great point, of course the Bush family has no interest in speaking about the economic disaster they left behind. Its well known that the Bush family has a very close relationship with the Saudi royal family or that W's 1.2 Trillion Dollar war in Iraq greatly benefited businesses in his state of Texa*s. There hasn't been a politician from that state to 'own up' to his responsibilities to this country, since Sam Houston did so in 1861.
@90in55; As for the growing interest in SUV's, you are right about people buying them in countries accross the globe. A friend in Australia wanted to buy a Toyota RAV4 FWD, the dealer explained to him that it was NOT available in FWD only AWD. Most of the people of Australia DO NOT NEED AWD, yet here is Toyota pushing their less fuel efficient AWD, increasing global fuel consumption. As long as Auto companies look only at making money. and not at the fuel consumption impact of their sales, we are screwed.
rexall says:
09:51 AM, 04/29/2011
From the lips of a manipulative crook nonetheless...
e90_m3 says:
09:29 AM, 04/29/2011
"We can adapt further by abandoning SUVs for good. While these vehicles have become more fuel-efficient over the years, they are still very heavy and burn a LOT of gas. I can't imagine what would happen if everyone in China and India decided they need Tahoes and Durangos too."
Agreed. People in other developed countries have been paying far more for gasoline and diesel and one cannot claim their living standards are any lower than ours (higher in many instances). If Helmut in Munich can bus around his family in a diesel sedan, why would Americans think it's their right to fuel their SUV with cheap gasoline?
As an ardent libertarian I believe in personal choices. I also believe in paying the full cost of your choices and not expect handout from anyone. If the true cost of energy security and delivery (including foreign aids, military intervention, health costs associated with pollution) will result in $10/gal for unleaded, so be it. Taxpayers are paying for it one way or another. Why should I expect someone to subsidize my driving?
higcorners says:
09:14 AM, 04/29/2011
How about reducing taxes included into gas prices?
90in55 says:
07:33 AM, 04/29/2011
We can adapt further by abandoning SUVs for good. While these vehicles have become more fuel-efficient over the years, they are still very heavy and burn a LOT of gas. I can't imagine what would happen if everyone in China and India decided they need Tahoes and Durangos too.