The national average for regular unleaded gas rose to $ 5,004 a gallon on June 11 from $ 4,986 the previous day, according to AAA data. High gas prices are a headache for President Joe Biden and congressional Democrats as they struggle to maintain limited control of Congress with the midterm elections coming in November. Sign up now for FREE unlimited access to Reuters.com Register Biden has pulled a number of levers to try to lower prices, including the release of record barrels from US strategic reserves, waivers of summer gasoline production rules and support in major OPEC countries to boost production. However, fuel prices are rising around the world due to a combination of demand recovery, sanctions on oil producer Russia following its invasion of Ukraine and a squeeze on refining capacity. DESTRUCTION OF DEMAND Road travel in the US, however, remained relatively strong, just a few percentage points below pre-pandemic levels, although prices have risen. However, economists expect that demand may begin to decline if prices remain above $ 5 a barrel for a stable period. “The $ 5 level is where we could see very large amounts of catastrophic gasoline demand,” said Reid L’Anson, a senior economist at Kpler. Adjusting for inflation, the US average gasoline is still about 8% below the June 2008 high of about $ 5.41 a gallon, according to the US Department of Energy. People drive along Governor Alfred E. Driscoll’s Bridge at the start of Memorial Day weekend, under rising gas prices and record inflation, in Keasbey, New Jersey, USA, May 27, 2022. REUTERS / Eduardo Munoz / File Photo read more Reuters Graphics Consumer spending has so far remained resilient even with inflation at its highest level in four decades, with household balance sheets backed by pandemic relief programs and a tight labor market fueled by strong wage earnings, especially for lower-income workers. Gasoline supply, a measure of demand, was 9.2 million barrels a day last week, according to the U.S. Energy Information Administration, broadly in line with the five-year seasonal average. The high prices for drivers come as the big oil and gas companies make big profits. Shell reported a quarterly record in May and Chevron Corp. and BP released the best numbers of the last decade. read more Other major companies, including Exxon Mobil and TotalEnergies, as well as independent US shale operators, have reported strong data that have pushed back repurchases and dividend investments. read more Many companies have said they will avoid over-investing to boost production because of investors’ desire to maintain a spending limit, rather than meeting the barrel prices above $ 100 that have been maintained for months. read more Refineries are struggling to rebuild declining stocks, especially off the east coast of the United States, reflecting exports to Europe where buyers are weaned from Russian oil. Refineries currently use about 94% of their capacity, but overall U.S. refining capacity has declined, with at least five oil refineries shutting down during the pandemic. That has left the United States structurally deficient in refining capacity for the first time in decades, analysts said. Sign up now for FREE unlimited access to Reuters.com Register Report by Laura Sanicola and Shivani Tanna. edited by David Clarke and Jason Neely Our role models: The Thomson Reuters Trust Principles.
