FULL GAGGLE: Kevin Hassett Takes Questions From Reporters About High Gas Prices, Iran War

Right. Well, the price of gasoline, of course, is very, very high. We expect that that's a temporary phenomenon. You saw that one of the side effects of the war that is going to have a big long-term positive effect is that the UAE has left OPEC, which basically breaks OPEC. Our expectation is that the straits will be opened soon, and when that happens, there's a heck of a lot of excess capacity that OPEC has been constraining that can come through the Gulf. And so futures markets already are saying that this is a temporary phenomenon and prices are going to go down. But we think that we're more optimistic even than futures markets because we've started to account for the fact that UAE left OPEC and they have a massive amount of excess capacity. They could turn the knobs up to 100% right away and that will have a huge effect on oil prices around the world.

Well, we've taken all the steps necessary for now. We've got some things left that we could consider, but the bottom line is that we wanted to see on the ground what the oil companies were experiencing, especially the people who have ships that are in there, how their people are doing and so on. But everybody told us exactly what I just said, that once we get the straits open, the amount of oil that can come through is going to be bigger than you've ever seen. In part because the Saudis have two million barrels a day of excess capacity and they're eager to make up for lost revenue. And the Emiratis, you know, have a large amount as well. And so, pre-conflict, we're looking at like about 20 million barrels a day. And I think that it's going to be even more coming out of there.

Those are ongoing negotiations with the Commerce Department and the creditors, and so I can't comment on those right now.

It depends. The creditors could give them more time by helping them out if they want to hold this up.

That's not—I'm not involved in the negotiations.

Well, yes. So, in fact, what we've said is that we want the Inspector General at the Fed to tell us what is the source of the cost overruns. The Inspector General at the Fed is part of the Fed. So, it's extremely respectful of Federal Reserve independence to have their Inspector General look into something that's a massive multi-billion dollar cost overrun. I expect that that person's probably already doing that. And so to say that we're opposed to independence of the Fed by asking the Fed's own institutional investigators to look into something that if I were running any agency in government and I saw a cost overrun like that and I were running the agency, I'd ask my Inspector General to tell me what happened. And so I don't think that it's in any way a threat to Federal Reserve independence. And so I just think that Chairman Powell, soon to be former Chairman Powell, is incorrect. And finally, I think that this is a situation that I've known Kevin Warsh for 25 years and he's the kind of person with the strong leadership skills and diplomatic skills to get this thing resolved. I'm highly confident he's going to be confirmed and that when he's confirmed, he's going to go in there and he's going to find a way to work this out.

Jet fuel prices were an especially big concern at the beginning because the jet fuel on the West Coast was coming in from Asia, and Asia is one of the places most affected. So we actually had Korean refineries sending jet fuel to our West Coast refiners, and it's an example of how President Trump has taken every step to make sure that the impact of these higher prices and potential supply disruptions are minimized in the US. So we waived the Jones Act. We got the jet fuel into the West Coast of the US. And again, our expectation is that everything's going to increase, that supply will increase rapidly once the straits are open. And we're extremely hopeful. You know, if you look at the Iranian economy right now, it's extremely on the ropes. They're having hyperinflation. They're running out of food. It's, you know, any leadership of any country that cares at all about its citizens should make a deal.