The national average was at $ 4.07 when the current series of price increases started on April 15. The current price indication from OPIS represents an increase of 23% in less than two months. And rising gasoline prices do more than just cause pain for drivers. They are a key factor in the rate at which consumers pay for a full range of goods and services growing at the fastest rate in 40 years, according to the government’s inflation report on Friday. While the national average of $ 5 is new, $ 5 gas has become unpleasantly common in much of the country. Data from OPIS, which collects measurements from 130,000 U.S. gas stations used to collect AAA media, showed that 32% of gas stations nationwide, nearly one in three, were already charging more than $ 5 a gallon per measurement. the manufacture. And about 10% of stations across the country charge more than $ 5.75 a gallon. The nationwide average was $ 5 a gallon or more in 21 states plus Washington DC on Saturday reading.
Gas $ 6 may be next
And gas prices are unlikely to stop there. With the summer travel season beginning, the demand for gasoline, combined with the Russian oil shipments that were interrupted due to the war in Ukraine, the oil prices are soaring in the world markets. The U.S. national average for gasoline could be close to $ 6 later this summer, according to Tom Kloza, global head of energy analysis for OPIS. “Everything goes from June 20 to Labor Day,” Kloza said earlier this week about the demand for gas as people took to the streets for long-awaited getaways. “Come on, hell or high gas prices, people are going on vacation.” The highest average in the entire state was long ago in California, where the average was $ 6.43 a gallon in Saturday readings. But the pain of higher prices is being felt across the country, not just in California or other high-priced states.
Cheap gas is hard to find
This is partly because the cheapest price was not so cheap – the average price of $ 4.47 per gallon in Georgia gives it the cheapest average in the entire state. Less than 300 gas stations out of 130,000 nationwide charged $ 4.25 a gallon or less on Friday reading by OPIS. For comparison, before the price increase earlier this year, the national record average for gas was $ 4.11, set in July 2008. And even in some states with cheaper gas prices, such as Mississippi, lower average wages mean that drivers there have to work longer hours to earn the money they need to fill their tank from drivers in some of the states with the highest gas prices, such as Washington. There are some early signs that people are starting to reduce their driving despite higher prices, but it is still a modest drop. The number of gallons pumped at service stations in the last week of May fell by about 5% from the same week a year ago, according to OPIS, although gas prices have risen more than 50% since then. The number of car trips to the US has dropped by about 5% since the beginning of May, according to mobility research firm Inrix, although those trips have continued to grow by about 5% since the beginning of the year. The main concern is that consumers will cut other spending to continue driving, which could push an economy that is already showing signs of weakness in a recession.
Many reasons for record prices
Apart from the strong demand for gasoline, there is also a supply problem that raises the price of both oil and gasoline. Russia’s invasion of Ukraine, sanctions on Russia since then imposed on the United States and Europe are a major factor, as Russia has been one of the world’s leading oil exporters. But it is only part of the cause. Oil is a commodity traded on world markets. The United States has never imported significant quantities of oil from Russia, but Europe has traditionally depended on Russian exports. The recent EU decision to ban oil tanker shipments from Russia has boosted oil prices worldwide. The price of a barrel of crude closed above $ 120 a barrel on Friday, from just under $ 100 a month ago. Goldman Sachs recently predicted that the average price for a barrel of Brent crude oil, the benchmark used for crude oil in Europe, would be $ 140 a barrel between July and September, up from its previous call for $ 125 a barrel. . Factors other than Russia’s withdrawal from the world market are limiting supply. OPEC and its allies drastically reduced oil production as demand for oil collapsed in the first months of the pandemic, as many of the world’s businesses closed and people stayed close to home. Global futures contracts were briefly traded in negative territory due to a lack of space to store surplus oil. Some oil-producing countries have reduced production in an effort to support prices, and some of that production is back online, but not all. US oil production and refining capacity have also not fully recovered to pre-pandemic levels. And because prices are even higher in Europe, some U.S. and Canadian refineries that would normally supply the U.S. market with gas export gasoline to Europe. Many oil companies have been slow to increase production, despite the high price that oil could catch, instead of using these high profits to buy back their shares in an effort to raise their share price. ExxonMobi (XOM) announced that it intends to repurchase $ 30 billion of its shares, more than its total capital expenditure budget for the year. – CNN’s Matt Egan and Michelle Watson contributed to this report.
