Treasury Secretary Janet Yellen Warns Gas Prices Could Spike This Winter — Says 'It's a Risk'

U.S. Treasury Secretary Janet Yellen has warned that gas prices could rise again this year. “It’s a risk that we’re working on the price cap to try to address,” she stressed. “Our price cap proposal is designed to both lower Russian revenues … while also maintaining Russian oil supplies that will help to hold down global oil prices.”

Janet Yellen on Gas Price Increase, Inflation, EU Sanctions, and Russian Oil

Treasury Secretary Janet Yellen talked about the U.S. economy, inflation, gas prices, and Russian oil in an interview on CNN’s “State of the Union” Sunday.

When asked whether Americans should be worried about gas prices rising again later this year, Yellen replied:

Well, it’s a risk. And it’s a risk that we’re working on the price cap to try to address.

“Our price cap proposal is designed to both lower Russian revenues that they use to support their economy and fight this illegal war, while also maintaining Russian oil supplies that will help to hold down global oil prices,” Yellen detailed. “So I believe this is something that can be essential, and it’s something that we’re trying to put in place to avoid a future spike in oil prices.”

The European Union imposed a sanctions package in June that will ban seaborne imports of Russian crude oil as of Dec. 5 and petroleum product imports as of Feb. 5, 2023. The sanctions also ban EU companies from providing shipping insurance, brokering services, or financing for oil exports from Russia to other countries.

“This winter, the European Union will cease, for the most part, buying Russian oil,” Yellen explained Sunday. “In addition, they will ban the provision of services that enable Russia to ship oil by tanker.”

The treasury secretary cautioned:

And it is possible that that could cause a spike in oil prices.

The average gas price in the U.S. has fallen steadily since hitting a record high in June. However, the treasury department has estimated that banning insurance for Russian seaborne supplies could take as much as five million barrels a day of crude and refined products off the market, which would trigger a massive price spike.

During the Sunday interview, Yellen also expressed her faith in the Federal Reserve to determine the best course of action to avoid an economic recession. She admitted that a recession is “a risk when the Fed is tightening monetary policy to redress inflation,” noting that “it’s certainly a risk that we’re monitoring.”

Claiming that the U.S. economy was already in bad shape back in 2021 when Joe Biden took office as the president of the United States, Yellen said:

We’re seeing some slowdown in growth, but that’s natural.

Yellen reiterated that she is optimistic about the U.S. economy. In July, she said the U.S. economy is in a state of transition, not recession. Despite higher food and energy prices, the treasury secretary opined: “We’ve got a good, strong labor market, and I believe it’s possible to maintain that.”