According to the Labor Department, in May, the US consumer price index increased 8.6 percent from a year earlier, the biggest increase in 40 years. A breakdown of the components of the price index reveals that fuel prices were the main culprit, increasing 34.6 percent from a year earlier, followed by an increase of almost 12 percent in food prices, the other most volatile component of the index. The title of a Washington Post editorial (06/13/22) went a step further, “Hate $5 gas? It’s largely Mr. Putin’s fault.” In this context, it is now confirmed that President Joseph Biden will travel to Saudi Arabia in July. The purpose of the trip is to discuss security issues, including energy security. The Saudi kingdom is the second producer of oil in the world and has the capacity, together with the United Arab Emirates, to increase production in the short run.
With crude prices around $120 a barrel and gasoline prices in the United States over $5 per gallon, last week, there was a positive signal. The Organization of Petroleum Exporting Countries and other non-members announced that they will increase production by 648,000 barrels per day in July and also in August, from the monthly increase agreed previously of 432,000 barrels per day.
