President Joe Biden has come under fire for blaming inflation and the rising cost at the gas pumps on Russian President Vladimir Putin and the invasion of Ukraine, but he is correct in part with his assessments, Peter Morici, the former chief economist for the International Trade Commission, told Newsmax on Thursday.
"It's important to recognize that 50% of the CPI [consumer price index] is shelter, gasoline, and other fuels like natural gas, food, and new cars, and none of those can he affect directly," Morici said of Biden on Newsmax's "American Agenda." "In regard to the supply chain on food and fuel, he is correct in the sense that there is no solution without a solution in Ukraine."
Further, Biden could open up drilling in the United States, but that won't help the situation either, because "even if you open up drilling here, you're not going to get enough additional fuel in the United States," said Morici.
Meanwhile, oil futures have slipped slightly before popping back up, and Morici said that the price of oil is "extraordinarily sensitive" to demand.
"A 1% increase or decrease in demand will have a 10% effect on price," he said, adding that oil companies are anticipating a demand.
"Look at the papers," Morici continued. "They pick up on all the negative news about the economy, but very little of the positive. For example, yesterday we had very good factory orders, but instead, they chose to focus on, you know, the ISM [manufacturing index] and consumer expectations and things like that, so right now everybody's talking recession and placing odds on it."
However, Morici said he's a "little bit puzzled" over Biden's decision to send 5 million barrels of oil to Europe and Asia in June, but added that it's important to remember that "refineries are key to very specific types of oil."
"There may be such rations where displacing some oil in Asia may send it here and things of that nature, but it's up to [Biden] to explain that, and he hasn't," said Morici. "But still, you know, if he opens up drilling here, and he's basically decided that there'll be no more drilling in the Atlantic or the Pacific and very limited drilling in the Gulf and off the coast of Alaska, you know, we could pick up you know, in time 10, 12, 15 million barrels a day."
Refineries matter as well, but there has been a shutdown of their capacity because of Biden's policies, said Morici.
"The oil industry isn't going to reopen those refineries unless they have some assurance that if they do, they will be welcome for not just this year, but the next five or 10 years," he said.
Morici also responded to a recent Food Industry Association report showing that shoppers are changing their buying habits because of higher prices.
"It gets really basic," he said. "For example, when I was a young economist, I was in a meeting, we had somebody from one of the agricultural companies, Conagra, and he said, you know, when the recession starts, people stop eating bacon and eggs and they start eating more cereal. Likewise, people go from Campbell's pork and beans to store-brand pork and beans. It's very bad news for Campbell because you really quickly discover that Safeway brand pork and beans taste about the same."
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Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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