HOUSTON — Gasoline prices reached a grim milestone Saturday, with the national average for regular gasoline hitting $5 a gallon.
Summer gasoline is always more expensive because the demand for fuel kicks in on Memorial Day weekend. But oil and refined fuel prices have risen this year to their highest levels in 14 years, largely due to the Russian invasion and resulting sanctions, and a rebound in energy use as the economy recovers from the coronavirus pandemic.
Saturday’s national average price of gasoline was $5.00, up 60 cents from the previous month. A year ago, gas sold for $3.08, according to AAA Car club. The national average was at its highest point since March, when it rose above previous record In July 2008, when oil was trading at more than $133 a barrel. That was more than ten dollars above the current level, excluding inflation. At the time, the national average price for gasoline was $4.11, or about $5.37 a gallon in today’s dollars.
The average price is over $4 a gallon in all states. in CaliforniaIt is one of the most expensive states in the country for fuel, at more than $6 a gallon. The states that have seen the largest increases in gasoline prices recently include Michigan, Delaware, Maryland and Colorado.
Energy experts estimate that every penny that increases the price of gasoline costs Americans an additional $4 million a day.
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Pack yourself on a raucous summer excursion,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. “The average consumer will pay $450 a month for their fuel needs, and that’s for just over $100 in 2020 during the pandemic.”
The war in Ukraine had the most direct impact on gas prices, as sanctions against Russia pulled more than 1 million barrels of oil off global markets. Energy traders also raised oil prices in anticipation of a further decline in Russian production and exports.
But many other factors contributed to the price hike.
There is not enough capacity to refine oil into gasoline, diesel and jet fuel. Oil companies have closed quite a few refineries in recent years, especially during the pandemic when demand has fallen. A few new refineries will open or expand over the next year, which may help.
But for now, analysts say strong gasoline demand is straining tight supplies and driving prices higher as drivers hit the road after several waves of new Covid-19 alternatives kept them close to home. The easing of strict epidemic lockdowns in China has also pushed up oil prices.
Gas prices are rising – along with the rising costs of other necessities such as food And the Shelter – big Problem for President Biden. Many political experts believe that Democrats may suffer losses in the November elections because voters are angry and frustrated high inflation. a Friday report It showed that consumer prices accelerated again in May, rising 8.6 percent from a year earlier, the fastest pace in more than 40 years.
Last week, as gas prices approached the $5 threshold, Biden administration officials said the president would Travel to Saudi Arabia, one of the world’s largest oil producers, is in an apparent attempt to restore diplomatic relations and, most importantly, ask for help in lowering energy prices. It also encourages domestic producers to pump more oil, despite the reluctance of major oil companies to increase investments significantly, preferring to return profits to investors through dividends and share buybacks.
In the past, when oil companies produced more oil in response to higher prices, it caused a glut and undermined their profits.
Mr. Biden has a little Impact on gas prices, which are governed by global supply and demand. Experts say that even Saudi Arabia is not in a position to cut prices quickly because it does not have the ability to fully offset the expected drop in Russian production. The European Union agreed last month to ban most Russian oil by the end of the year.
In March, when Mr. Biden announced that the United States was Russian oil and natural gas embargoHe warned Americans that “it would be costly to defend freedom.” There is some evidence that higher prices are starting to affect demand. Travel experts say some people choose to drive shorter distances on vacation.
Ultimately, higher pump prices will likely encourage motorists to switch to electric vehicles, but the purchase of such vehicles is expected to reduce demand over the coming years, not months.
“It takes a while for price increases to affect demand,” said Donald Hertzmark, president of DMP Resources, a Washington-based energy consultancy. “Consumers must believe that price increases are real and permanent, and there must be a period of adjustment for substitution, conservation and destruction of demand.”
Clifford Krause I mentioned from Houston and Marie Solis Reported from New York.
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