There’s not a lot that Joe Biden, Congress or the Federal Reserve can do to bring down the record high gas prices. High gas prices themselves might do the job for them.
That's because big swings in prices of a good or service are typically caused by an imbalance between supply and demand. And when the imbalances cause prices to soar, as has happened to gas and oil prices since Russia invaded Ukraine in February, those high prices can help rebalance supply and demand. How? By causing more supply and/or less demand.Increasing energy supply, especially enough to rebalance markets, will be difficult.
"The biggest risk to demand would be if the high gasoline prices plunge the nation into recession.Nothing kills demand like a recession, which reduces economic activity overall. When people get laid off, there's less need to drive to work and fewer people driving to the store or other destinations.The previous record for high gas prices before the current spike came in July 2008, when the national average hit $4.11 a gallon.
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