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Bernanke: Policymakers have few short-term options to lower gas prices
U.S. policymakers have few options to significantly lower gas prices in the short term, Federal Reserve Chairman Ben Bernanke told a House committee Wednesday.
Bernanke, testifying before the House Financial Services Committee, said market fears stemming from supply disruptions in Iran are the main cause of high gas prices.
“So I think the best thing we could do would be to resolve that situation, but obviously that's well beyond my capacity or probably anyone's capacity,” Bernanke said, referring to the threats by Iran to cut off the Strait of Hormuz, a strategic oil route.
“So I'm not sure what can be done to provide substantial relief in the very short term.”
Bernanke’s comments come as U.S. gas prices are soaring, reaching an average of $3.73 per gallon Wednesday. That’s up about 15 cents from this time last week.
Bernanke's comments echo those of White House and administration officials, who have stressed in recent weeks that there is "no magic bullet" to lower gas prices.
Experts have long warned that federal policymakers have few options to lower gas prices in the short term. Gas prices are largely tethered to oil prices, which are set on global markets. Even a dramatic expansion of domestic oil-and-gas leasing would have little short-term effect on gas prices, they say.
Bernanke stressed that the Obama administration is watching gas prices closely.
“It has a direct effect on inflation and it also is bad for growth because it takes away buying power from households,” he said. “So it’s a real concern for us.”
Asked if the Federal Reserve has the power to give consumers relief at the pump, Bernanke said he has few options.
“I don't think the Fed can do too much about the price of gas,” he said, noting that the country needs to pursue long-term policies to become less reliant on foreign oil. “I think it is more important that we try to establish security of supply and also take measures to continue to reduce demand.”
Bernanke has warned that a major disruption in foreign oil supplies could threaten the economic recovery.
Pressed by lawmakers whether Obama will release oil from the Strategic Petroleum Reserve, a 696-million gallon emergency oil stockpile, Bernanke demurred.
"That's really for the administration to decide," he said.
The White House has said that it is keeping "all options on the table" to address supply disruptions and high gas prices.
Read more about Bernanke’s testimony Wednesday here.
