Econ 230 Milestone 3

Tara Collins

Macroeconomics Milestone 3

Dr. Choi

31 July 2022

Shell and the Federal Reserve

The Federal Reserve is the central bank of the United States. It was formed by Congress to help make the national economy and financial system safer and more stable. "The Fed" influences the money supply and credit conditions in order to accomplish several goals: to promote steady prices and full employment, to promote stability in the financial system, and to facilitate sustainable economic growth. Other duties include regulation of the banking industry and making sure consumers have access to the information they need in order to participate in the financial system” (The Federal Reserve | Cambridge Credit, 2022). This policy might affect Shell gas economic growth but not that much because it did not stabilize the prices of gas during inflation. Prices continued to go up. We can clearly see that the policies of the federal reserve help to promote employment and inflation. This helps the economic growth of Shell because people need gas and its one of those goods that people still buy even when the prices are high.

“In company news, Shell PLC (LSE:SHEL, NYSE:SHEL) will publish a first-quarter trading update where it is highly likely to confirm further positive impact from high oil and gas prices, driven by macroeconomic and geopolitical situations, boosting the oil supermajor’s Integrated Gas and Oil Products arms” (Shell, BP and IAG closely watched in coming week, with Fed and Bank of England stoking rate angst, 2022).

As the Federal Reserve conducts monetary policy, it influences employment and inflation primarily through using its policy tools to influence the availability and cost of credit in the economy. The federal funds rate that banks pay for overnight borrowing in the federal funds market, sometimes changes and these changes influence other interest rates that influence borrowing costs for households and businesses. When interest rates are low, it is cheaper to borrow. Households are more willing to buy goods and services at this point. Businesses are more apt to purchase equipment and property and hire more workers which helps the employment rate. This directly affects the purchasing of gas because if people are working, they are traveling more and also spending more on gas to drive places.

Works Cited

Cambridge-credit.org. 2022. The Federal Reserve | Cambridge Credit. [online] Available at: <https://www.cambridge-credit.org/federal-reserve.html?gclid=Cj0KCQjw0JiXBhCFARIsAOSAKqCEn5E0lwhfJ0ULQk1SHVPPkaint2s1eVFlpUYe7JtKF95nmrr09SEaAvfEEALw_wcB> [Accessed 31 July 2022].

Proactiveinvestors NA. 2022. Shell, BP and IAG closely watched in coming week, with Fed and Bank of England stoking rate angst. [online] Available at: <https://www.proactiveinvestors.com/companies/news/980998/shell-bp-and-iag-closely-watched-in-coming-week-with-fed-and-bank-of-england-stoking-rate-angst-980998.html> [Accessed 31 July 2022].