The US average price of gasoline tops $ 5 per gallon in historical time

June 11 (Reuters) – US gasoline prices averaged more than $ 5 per gallon for the first time on Saturday, AAA data showed, prolonging a rise in rising fuel costs.

The national average price for regular unleaded gas rose to $ 5,004 per gallon on June 1[ads1]1 from $ 4,986 a day earlier, AAA data showed.

High gasoline prices are a headache for President Joe Biden and the Congress Democrats as they struggle to maintain their slim control over Congress with midterm elections in November.

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Biden has pulled a number of levers to try to lower prices, including a record release of barrels from US strategic reserves, waivers on summer gasoline production rules, and relied on major OPEC countries to increase production.

Nevertheless, fuel prices have risen worldwide due to a combination of rising demand, sanctions against oil producer Russia following the invasion of Ukraine and a squeeze on refining capacity.

DEMAND DESTRUCTION However, US road traffic has remained relatively strong, only a few percentage points below pre-pandemic levels, although prices have risen.

Nevertheless, economists expect that demand may begin to decline if prices stay above $ 5 a barrel for an extended period.

“At the $ 5 level, we can see very large amounts of fuel demand destruction,” said Reid L’Anson, senior economist at Kpler.

Adjusted for inflation, the US gasoline average is still approx. 8% below the peaks in June 2008 around $ 5.41 per gallon, according to figures from the US Energy Department.

Reuters graphics

Consumer spending has so far remained resilient even with inflation at its highest level in more than four decades, with household balances backed by pandemic aid programs and a tight labor market that has led to strong wage growth, especially for low-income workers.

The gasoline products delivered, a proxy for demand, were 9.2 million barrels per day last week, according to the US Energy Information Administration, largely in line with the five-year season average.

The high prices for drivers come as large oil and gas companies make large profits. Shell reported a record quarter in May and Chevron Corp and BP have posted their best figures in a decade. read more

Other major companies, including Exxon Mobil and TotalEnergies, as well as US independent slate operators, reported strong numbers that have encouraged share repurchases and dividend investments. read more

Numerous companies have said they will avoid excessive investment to increase production due to investors’ desire to keep the line on spending, instead of responding to $ 100 plus barrel prices that have persisted for months. read more

Refiners have struggled to rebuild stocks that have sunk, especially on the US East Coast, reflecting exports to Europe where buyers are weaning themselves from Russian oil.

Refineries currently use around 94% of their capacity, but total US refining capacity has fallen, with at least five oil treatment plants shutting down during the pandemic.

As a result, the United States has structurally lacked refining capacity for the first time in decades, analysts said.

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Reporting by Laura Sanicola and Shivani Tanna; editing by David Clarke and Jason Neely

Our standards: Thomson Reuters Trust Principles.

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