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$ 5 gas could be widespread as prices hit another record high

Gas prices are now up 27% from the day before Russia invaded Ukraine.

“Everything points to even higher prices. We are well on our way to $ 5,” Andy Lipow, president of Lipow Oil Associates, told CNN on Monday.

Referring to an increase in fuel futures, the Lipow fuel forecast increases from $ 4.50 to $ 4.75 per gallon, suggesting that drivers on Memorial Day weekend may be hit by record highs.

Lipow said $ 5 is “possible”, although he admitted that the outlook could change significantly if there is a surprising development in the war in Ukraine or with Covid.

According to AAA, the average is already over $ 5 per gallon in four states: California, Washington, Nevada and Hawaii. Oregon is only a penny away.

The gas tip makes inflation worse

It is important to note that gas prices are not at a record high after adjusting for inflation. The inflation-adjusted record was set in June 2008 when they averaged $ 5.38 per gallon, according to the US Energy Information Administration.

Nevertheless, the recent jump in gas prices threatens to exacerbate inflation headaches that families and the US economy are facing in general.

The problem is that supply is still unable to keep up with demand, especially for petrol, diesel and other petroleum products. Gasoline futures jumped to new record highs on Monday.

Record diesel prices, tight supplies could be the next blow to the US economy

The good news, according to Lipow, is that gasoline production should increase in the coming weeks as US refineries end their maintenance season.

The bad news is that oil prices are still high.

The oil price pushed further into three-digit territory on Monday, which raised the specter of even higher gas prices in the days ahead.

US oil jumped 3.4% to $ 114.20 a barrel – the highest close since March 23. Brent oil, the world benchmark index, rose around 3% to $ 114.50 a barrel in recent trading.

The demand for energy continues to increase as the world recovers from Covid-19. Despite China’s Covid shutdowns, oil demand in March was at 101% of 2019 levels, according to the International Energy Forum, which cites recently released data from the Joint Organization’s Data Initiative (JODI).

However, supply continues to fluctuate, with production at only 97% of 2019 levels.

“The Covid situation in Shanghai is loosening up a bit. Demand may be trickling back,” said Robert Yawger, vice president of energy futures at Mizuho Securities. “If there is a breakthrough, it could release crude oil.”

Until the last few days, the price of oil has not risen nearly as much as the sales prices of petrol and diesel, both of which are at or near record highs.

The supply of petroleum products such as petrol has struggled to keep up with demand, partly due to a limited amount of firepower from refineries following the closure of refineries in recent years.

“No one can turn up the refinery because they have no spare capacity,” Yawger said.

Over the past two years, the United States has lost about 5.5 percent of its refinery capacity, according to the U.S. Energy Information Administration.

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