President Joe Biden's administration called for a summer gas tax holiday as crude oil prices plunged on fears of a recession.
In Wednesday's trades, the price of crude fell to a low of $101 per barrel, its lowest level since May. The price of crude has fallen from a high of more than $130 per barrel.
According to Christian Sewing, the CEO ofDeutsche Bank, there is a 50% chance of a global recession in the next year. There's a 40% chance of an economic recession going into 2023, according to a Citi analyst.
"We wouldn't see that until next year because the tightening around the Fed takes around 12 to 18 months to really show up in economic conditions," Bitterly said.
A recession would lower consumer demand for oil as travel activity falls, which would likely lead to lower oil prices as supply is able to play catch up after a year filled with shortages
The Federal Reserve raised interest rates last week due to the high inflation caused by rising oil prices. The high gas prices, which hit an average of $5.00 per gallon earlier this month, have been a priority for the Biden administration.
President Biden wants Congress to suspend the federal gas tax for three months in order to save consumers money at the pump. As the summer travel season begins to ramp up, Biden urged individual states to suspend their gas taxes.
While a gas tax holiday would give immediate relief to traveling consumers, it could also boost demand for the commodity and inadvertently push prices higher.
It will fuel the demand. Target CEO Brian Cornell told the Economic Club of New York that it was doing nothing to increase supply.
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