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Gas prices top $4 per gallon in every U.S. state

Yahoo Finance's Rick Newman examines how average gas prices have climbed above $4 in every state, the ways President Biden could lower energy prices, and the inflationary pressures impacting consumer behaviors.

Video transcript

RACHELLE AKUFFO: Welcome back, everyone. Another new record for national gas prices as we near Memorial Day, and of course, as schools prepare to let out for the summer. Yahoo Finance's Rick Newman joins us now with the latest. Rick, is there any good news to be found at the pump right now?

RICK NEWMAN: Don't blame me, but I don't think there is any good news on gas prices at the moment. Gas prices now, of course, are around $4.50 a gallon. That's a phenomenal record high. The CEO of Occidental Petroleum spoke at an event sponsored by the Dallas Federal Reserve Bank last Friday, and she said she thinks it's only going to get worse for consumers, meaning oil prices are probably going to go up, rather than down, for the next few months, and that gasoline prices are probably going to go up as well.

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People in the industry say there's just not very much spare capacity. We still are not through this embargo on Russian oil, which is probably going to get tighter. And those lockdowns in China that we've been talking about, that has actually depressed demand for energy in China. But we just heard on the show that China may be coming out of those lockdowns, so we might see new demand for oil and gas in China. So this could be a fairly painful summer for motorists.

SEANA SMITH: And Rick, we know that this is so important here for President Biden, something that he has really focused on. He has, of course, authorized the release of some oil from the US Reserve. But we haven't really seen an impact. Is there anything else, I guess, that he could potentially, he, the administration, could potentially do?

RICK NEWMAN: Well, I did see one bit of analysis that pointed out that since that oil began hitting the market, and that oil is going to be coming into the market starting-- it started this month-- keep coming through November that prices, oil prices, have actually fallen by about $10. So maybe it has helped a little bit. Biden could help. He could do things to create new incentives for the oil and gas industry here in the United States.

And let's remind people, this is the private sector. The government here in the United States does not control oil drilling. There are things he could do to make it easier for drillers, but it would completely contradict his green energy and his climate agenda. So he has done a few small things. He has not done big things because, basically, it's just not what he stands for. So Biden is sticking with his green energy plans. And gas prices are going to stay high for some time.

DAVE BRIGGS: We'll see how the E15 moves the price of gas this summer. But consumers are a bit confused at the moment because we saw the price of crude gradually come down, while the price of gas was moving in the opposite direction. Now oil is coming back up, but why do they not move together?

RICK NEWMAN: By the way, if you ever want to talk about E15, ethanol, which basically is not good for your car, I'd love to come back and talk on that. That's basically a political giveaway to corn farmers in the Midwest. But oil and gas prices, they do move in the same direction over time, but there's a lag. So you don't always see them moving in the same direction in a short period of time.

But I mean, if you just look at them over time, you'll see they do go up and down, more or less the same, but people get frustrated when they hear oil went down, and they're looking at their gas-- corner gas station. Why is the gas price not coming down? Those retailers set the gas price. Again, the government doesn't set the gas price.

And if you're a retailer, you want to keep your prices high, as long as you can get people to pay those prices. So they only lower their prices when the guy down the block starts to lower his prices to get new drivers coming into his store. And that's the way the market works. It's always worked that way. I don't think there's anything different right now.

RACHELLE AKUFFO: And in terms of how closely this could be, in a midterm election year, when you do have still inflation not under control and people worrying about their gas prices, how closely could this be for the administration when you look where Biden's approval rating already is?

RICK NEWMAN: Well, high inflation, which is now at 8.3%, is potentially ruinous for Biden and the Democrats, who are running for reelection in Congress. But the question is, what is inflation going to be, let's say, two months before the election? And it seems possible that overall inflation could be going down. I mean, your last set of guests talked about that. We may have seen peak inflation. So we could see inflation in things like automobiles and food that has been going higher recently. That could end up going lower.

But we could actually have gasoline inflation that gets worse. And I don't think that's a good scenario for President Biden, even if, let's say, inflation, the overall rate falls to 5% or even less than 5%. Gas prices just have an outsized effect on consumer psyches. I don't know why that is.

Perhaps it's just because everybody sees the price in two-foot high letters all over the country. There's no other price that gets advertised the way gasoline does. And it just bums them out when they see a 4 in front of that number, and God forbid a 5 in front of that number. So, for Biden to-- for this to be working in Biden's favor, I think the price of gas needs to start with 3, not 4, and certainly not 5, within three or four months.

DAVE BRIGGS: Impossible to imagine that. Man, I paid 6 a week ago in San Francisco, as did Seana.

RICK NEWMAN: Bad.

DAVE BRIGGS: Good to see you, Rick Newman. Although it is bad news, it's always good to see you.