President Trump Turns to Congressional Democratic Leadership

by Denise A. Bode

Last week, President Donald Trump turned to Democrats for the first time on a number of key fiscal issues, surprising his Republican Congressional leadership. He agreed to a bill that included raising the limit on federal borrowing, extending current government funding and providing disaster relief for hurricane victims. The House had passed a clean relief bill only, but the Senate quickly passed the deal cut by the President with a vote of 80-17. Then on Friday morning, the House easily cleared the package with a vote of 316-90 to provide more than $15 billion in disaster aid for Hurricane Harvey victims, raise the debt ceiling and fund the government for three months. The President is expected to quickly sign the bill, delivering on the deal he struck with Democrats.

The President had also agreed to work with the Democratic leaders toward a permanent repeal of the requirement for Congress to repeatedly raise the debt ceiling.   House Speaker Paul Ryan said he opposes any effort to do away with the role of Congress in approving increases to the debt limit.   The next day he again reached out to the Democratic leadership on the fate of so-called Dreamers brought illegally into the United States as children. Democrats want Congress to pass legislation addressing the Dreamers without other issues attached, but Pelosi did not rule out including border security measures that Trump and Ryan want included.

His agreement to the Democrats terms for passage of the debt limit and the fiscal plan and his outreach on DACA, has many analysts wondering will this also play out in other major issues in play before the end of the year.  These include: tax reform, ACA overhaul, infrastructure and other expiring programs like the Federal Aviation Administration, the National Flood Insurance Program and the Children’s Health Insurance Program.

Extending the debt limit expiration date until December 8, sets up another end of year deal that could put the Democrats in the driver’s seat on key issues the Republicans hoped to have ready for action in that same time frame, such as tax reform.  Some Republicans argue that it will give Democrats the upper hand since Republicans will likely have to bargain with them for votes to continue government funding that expires the very same day.


 

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                FROM THE CHART ROOM

                Hurricane Harvey Lifts U.S. Gas Prices

                gas-prices-rise-per-harvey

                U.S. retail gasoline prices at the beginning of last week, averaged $2.68 per gallon (gal), 28 cents/gal higher than prices a week ago. Supply disruptions and refinery outages caused by Hurricane Harvey continue to affect gasoline supply and prices, particularly along the U.S. East Coast and the Gulf Coast, where gasoline prices are 39 cents/gal and 35 cents/gal higher, respectively, than they were a week ago, before the full effects of the storm were felt.

                The East Coast, Texas, and parts of the Gulf Coast were the hardest hit by rising gasoline prices in the wake of Hurricane Harvey. Gasoline prices in the Lower Atlantic region increased the most, up 41 cents/gal from last week. Prices also increased in the Central Atlantic and New England regions, up 37 cents/gal and 36 cents/gal, respectively, from last week. The Gulf Coast also saw higher gasoline prices, increasing by 35 cents/gal since last week. Texas and Florida, in particular, saw increases of 40 cents/gal. Gasoline prices in Houston, Miami, New York City, and Boston were up at least 35 cents/gal.

                comparisons-with-other-hurricanes

                Compared with other hurricanes that have made landfall in the United States since 2000, Hurricane Harvey’s impact on U.S. Gulf Coast spot gasoline prices has been on par with the impact from Hurricanes Katrina and Rita. In August 2005, gasoline spot prices rose nearly 30% within one trading day after the landfall of Hurricane Katrina in Louisiana. The gasoline spot price remained elevated for a second trading day before rapidly declining soon after. In September 2005, prices rose by almost 30% within three trading days after the landfall of Hurricane Rita before similarly declining. In contrast, gasoline spot prices remained stable or fell in the days after Hurricane Sandy, which hit the U.S. East Coast, and Hurricane Ike made landfall.

                Hurricane Harvey’s impact on gasoline prices was more gradual than the impact following Hurricanes Katrina and Rita had because refineries in Houston, Texas, and Port Arthur, Texas, began going offline in the days after the hurricane’s landfall near Corpus Christi. As a result, gasoline prices rose steadily for four trading days before starting to decline. Several Gulf Coast refineries affected by the hurricane have restarted and some are running at reduced rates after being shut down during the storm; however, several refineries remain shut down. Colonial Pipeline, a major pipeline system supplying petroleum products from the Gulf Coast to the East Coast, has restarted all its lines.  Link to EIA


                 

                 

                Michael Best Strategies’ Energy Team

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