Maybe you’ve noticed, but retail gasoline prices are creeping back up again. Late last year, the average price at the pump fell to nearly $3 a gallon, from a high of around $5 last summer. But over the past seven months, prices have been steadily trending upward again, to more than $3.75—increasing pressure on the Fed as it works to fight inflation without tipping the economy into recession.
Curious about this price escalation, I turned to my friend Dan Yergin, the world-renowned energy consultant and Pulitzer-prize winning author of The Prize, and of the recent book The New Map: Energy, Climate, and the Clash of Nations. Dan, who is also vice chairman of S&P Global, understands as well as anyone the ever-changing vicissitudes of the energy market, its role in the 2024 presidential race, and the politically-charged topic of climate change, which feels especially important this summer, one of the hottest on record.
High gas prices, after all, are more than just a local concern. Around a year ago, it was expected that oil would be priced as high as $120 a barrel. (It is about $80 a barrel today.) “All those forecasts have come down,” Dan told me. “And the number one reason they have come down is not about anything in the oil market directly: it’s because of China.” The expectation had been that China would come “bounding back” out of Covid, but that did not happen.