HOUSTON – Gasoline prices hit a sad milestone on Saturday as the national average for regular gasoline reached $ 5 a gallon.
Summer gasoline is almost always more expensive because fuel demand increases around Memorial Day weekend. But this year oil and refined fuel prices have risen to their highest levels in 14 years, largely due to the Russian invasion of Ukraine and consequent sanctions, and a rise in energy use. as the economy recovers from the coronavirus pandemic.
The national average gasoline price on Saturday was $ 5.00, 60 cents more than a month ago. A year ago, the gas sold for $ 3.08, according to the AAA Motor Club. The national average has been at an all-time high since March, when it surpassed its previous record set in July 2008, when oil traded at more than $ 133 a barrel. That was more than ten dollars above the current level without even considering inflation. At the time, the national average price of gasoline was $ 4.11, or about $ 5.37 a gallon in current dollars.
The average price is over $ 4 a gallon in all states. In California, for a long time one of the most expensive states in the country in terms of fuel, the price exceeds $ 6 a gallon. The states with the largest recent increases in gasoline prices include Michigan, Delaware, Maryland and Colorado.
Energy experts estimate that every penny of gasoline price increases costs the Americans an additional $ 4 million a day.
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“Get ready for a creepy summer trip,” said Tom Kloza, global head of energy analysis for the Oil Price Information Service. “The average consumer will pay $ 450 a month for their fuel needs and that compares to just over $ 100 in 2020 during the pandemic.”
The war in Ukraine has had the most direct effect on gas prices, as sanctions on Russia have pulled more than a million barrels of oil from world markets. Energy traders have also raised oil prices in anticipation of further Russian production and exports.
But many other factors have contributed to rising prices.
There is not enough capacity to refine oil in gasoline, diesel and aircraft fuel. Oil companies have shut down a handful of refineries in recent years, especially during the pandemic when demand plummeted. Some new refineries will be opened or expanded over the next year, which could help.
But for now, analysts say strong demand for gasoline is straining limited supplies and raising prices as drivers hit the road after several waves of new Covid-19 variants kept them close to home. . The easing of strict pandemic blockades in China has also pushed up oil prices.
High gas prices, along with rising costs for other necessities such as food and housing, are a major problem for President Biden. Many political experts believe Democrats could suffer losses in the November election because voters are angry and frustrated by high inflation. A report on Friday showed that consumer prices rebounded in May, up 8.6 percent from a year earlier, the fastest pace in more than 40 years.
Last week, as gas prices approached the $ 5 threshold, Biden administration officials said the president would travel to Saudi Arabia, one of the world’s largest oil producers. in an apparent attempt to re-establish diplomatic relations and, above all, to seek help by lowering energy prices. It is also encouraging domestic producers to pump more oil, although large oil companies are reluctant to increase investment significantly, preferring to return profits to investors through dividends and share buybacks.
In the past, when oil companies produced more oil in response to high prices, they caused an excess, which undermined their profits.
Mr Biden has little influence on gas prices, which are governed by global supply and demand. Experts say that even Saudi Arabia is not in a position to lower prices quickly because it does not have the capacity to fully compensate for the expected fall in Russian production. The European Union agreed last month to ban most Russian oil by the end of the year.
In March, when Mr. Biden announced that the United States was banning Russian oil and natural gas, he warned Americans that “defending freedom will cost.” There is some evidence that high prices are beginning to have an impact on demand. Travel experts say that some people choose to drive shorter distances during their vacation.
Over time, high prices at the pump are likely to encourage motorists to switch to electric cars, but purchases of these cars are expected to reduce demand over the next few years, not months.
“Rising prices are taking some time to affect demand,” said Donald Hertzmark, president of DMP Resources, a Washington-based energy consulting firm. “Consumers must believe that price increases are real and permanent, and there must be a period of adjustment for the replacement, conservation and destruction of demand.”
Clifford Krauss reported from Houston and Marie Solis reported from New York.