Gasoline Price Hits 5 Dollars in the United States, Rising at Fastest Pace in 40 Years. Gasoline at 6 Dollars Knocked on the Door

Gas Prices In The United States Have Been Rising For Eight Weeks And Reach The Highest Average Price In The Country’s History

On Saturday (the 11th), it was announced that the price of a gallon of gasoline hit a record level in the United States: for the first time, the average price in the country is US$ 5, according to data from the American Automobile Association (AAA). Each gallon corresponds to 3.8 liters of fuel.

However, the record is not surprising, given that fuel prices have been experiencing constant increases for eight weeks, with this latest price being the 15th consecutive time that AAA data shows a record price.

On April 15, when the price increase trend began, the national average was US$ 4.07. Thus, in less than two months, there has been an increase of 23%.

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According to the U.S. government’s inflation report released last Friday, gasoline prices are rising at the fastest pace in 40 years. In this regard, it is important to note that this phenomenon affects not only the lives of drivers but also impacts the prices paid by the public for a wide range of goods and services.

Although the national average of US$ 5 is unprecedented, in much of the country it is already common for this price to be paid for gasoline. According to data from OPIS, 32% of gas stations in the United States, which corresponds to nearly one in three, were already charging more than US$ 5 per gallon in readings taken on Friday. Moreover, about 10% of stations across the country are charging more than US$ 5.75 per gallon.

The state average, in turn, was US$ 5 or more per gallon in 21 states and in Washington DC in the Saturday reading.

National Average Gas Prices In The United States Could Soon Reach US$ 6

With the start of the summer travel season in the country, the demand for gasoline is expected to rise, which will lead to another increase in its average price. Furthermore, it is also necessary to remember that oil prices are rising in the global market, due to cuts instituted on Russian oil because of the war in Ukraine, which also contributes to the increase in the price of a gallon of gasoline.

According to Tom Kloza, global head of energy analysis at OPIS, the national average gasoline price in the United States could reach US$ 6 by the end of this summer.

Nationwide, the highest average is found in California, where it was recorded at US$ 6.43 per gallon in Saturday readings. However, it is evident that all states are being affected by the issue.

It’s Almost Impossible To Find Cheap Fuel In The U.S.

In Georgia, which has the cheapest average in the country, the average price per gallon of gasoline is US$ 4.47. Out of 130,000 gas stations analyzed, fewer than 300 were charging US$ 4.25 or less per gallon, according to Friday’s reading from OPIS. For comparative purposes, before the price increase began this year, the record national average had been set at US$ 4.11 in July 2008.

Even in states where gasoline prices are more moderate, such as Mississippi, there is not necessarily an advantage, since, as average wages are also lower, drivers have to work more hours to obtain the money needed to fill their tanks compared to individuals in states with higher prices, like Washington.

In this context, the number of gallons pumped at stations during the last week of May decreased by about 5% compared to the same week last year, according to OPIS. The number of car trips in the United States also dropped by about 5% since early May, according to mobility research company Inrix, although they have still increased by about 5% since the beginning of the year.

In this regard, economists are concerned that consumers may start cutting back on other spending in order to continue driving, which could lead to an economic recession.

What Is Causing The Record Prices?

The strong demand for gasoline is just part of the problem. This is because, in the wake of Russia’s invasion of Ukraine, supply has become reduced, as sanctions were imposed on Russia, which is one of the world’s major oil exporters, by the United States and Europe.

The European decision to break commerce with Russia, which established a relationship of dependency, caused the oil prices worldwide to rise. Thus, the price of a barrel of this fuel closed above US$ 120 last Friday, increasing from US$ 100 the previous month.

Moreover, other factors are also limiting supply. During the early months of the pandemic, there was a reduction in demand for oil, owing to business closures and lockdowns, which caused OPEC and its allies to cut fuel production. Now, part of that production is back online, but it has not fully recovered.

In the United States, oil production and refining capacity have also not fully recovered to pre-pandemic levels. As prices are even higher in Europe, some American and Canadian refineries, which normally supply the U.S. market, are now exporting gasoline to the European continent, further restricting supply in the country.