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Average US gas price reaches $ 5 for the first time

The album is hardly a surprise. Gas prices have risen steadily over the past eight weeks, and this latest milestone marks the 15th day in a row that the AAA reading has broken record prices, and the 32nd time in the last 33 days.

The national average was $ 4.07 when the current price of price increases began on April 15. The current price reading from OPIS represents an increase of 23% in less than two months.

And rising gas prices are doing more than just causing pain at the pump for drivers. They are an important factor in the prices paid by consumers for a full range of goods and services rising at the fastest pace in 40 years, according to the government̵[ads1]7;s inflation report on Friday.

While a national average of $ 5 is new, $ 5 gas has become uncomfortably common in large parts of the country.

Data from OPIS, which collects readings from 130,000 U.S. gas stations used to compile AAA averages, showed that 32% of stations across the country, nearly one in three, already charged more than $ 5 per gallon in measurements Friday. And about 10% of stations across the country charge more than $ 5.75 per gallon.

The statewide average was $ 5 per gallon or more in 21 states plus Washington DC in Saturday’s reading.

$ 6 gas may be next

And gas prices are unlikely to stop there. With the summer travel season underway, the demand for gasoline, combined with Russian oil shipments interrupted due to the war in Ukraine, is pushing up oil prices in global markets.

The US 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 when people go on the road to long-awaited getaways. “Come to hell or high gas prices, people are going to take vacations.”

The highest state average has long been in California, where the average was $ 6.43 per gallon in Saturday’s polls. But the pain of higher prices is 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 for the whole country. Less than 300 gas stations out of 130,000 nationwide paid $ 4.25 per gallon or less in Friday’s reading from OPIS. For the sake of comparison, before the price increase earlier this year, the record for the national average for gas had been $ 4.11, set in July 2008.

And even in some states with cheaper gas prices, such as the Mississippi, lower average wages mean that drivers there have to work more hours to earn the money needed to fill the tank than drivers in some of the more expensive gas states, such as Washington.

There are some early signs that people are starting to cut back on driving in the face of higher prices, but there is still a modest decline.

The number of liters pumped at stations in the last week of May was down approx. 5% from the same week a year ago, according to OPIS, although gas prices have risen more than 50% since then. The number of trips in the US by car has fallen around 5% since the beginning of May, according to the mobility research company Inrix, although these trips are still up by around 5% since the beginning of the year.

The biggest concern is that consumers will cut back on other expenses to keep driving, which could push an economy that is already showing signs of weakness into recession.

Many reasons for record prices

In addition to the strong demand for petrol, there is also a supply problem that drives up the price of both oil and petrol. Russia’s invasion of Ukraine, the sanctions against Russia imposed in the United States and Europe since then are an important factor, since Russia was among the world’s leading oil exporters. But that is only part of the reason.

Oil is a commodity traded on global markets. The United States has never imported significant quantities of oil from Russia, but Europe has traditionally been dependent on Russian exports. The EU’s recent decision to ban oil tankers from Russia caused oil prices to skyrocket globally.
The price of a barrel of crude oil closed above $ 120 a barrel on Friday, up from just under $ 100 a month ago. Goldman Sachs recently predicted that the average price of a barrel of Brent oil, the benchmark index used for oil traded in Europe, would be $ 140 a barrel between July and September, up from previous purchases of $ 125 a barrel.
Why US gas prices are at a record high, and why they will stay high for a long time
Other factors beyond Russia’s withdrawal from the global market limit supply. OPEC and its allies have sharply cut oil production as demand for oil crashed in the first months of the pandemic, as many of the world’s businesses closed and people stayed close to home. Global oil futures traded short in negative territory due to lack of space to store the abundance of oil. Some oil-producing countries cut production in an attempt to support prices, and some of that production is back online, but not all.

US oil production and refining capacity have also not fully returned to pre-pandemic levels. And because prices are even higher in Europe, some US and Canadian refineries that would normally supply the US market with gasoline export to Europe.

Many oil companies have been slow to increase production, despite the high price the oil could achieve, instead of using the sky-high profits to buy back their own shares in an attempt to raise the share price. ExxonMobi (XOM)has announced that it intends to repurchase $ 30 billion of the shares, more than the total investment budget for the year.

– CNN’s Matt Egan and Michelle Watson contributed to this report.

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