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A gallon of standard gas now costs $5 on average countrywide for the first time in history, according to AAA’s Saturday reading,
The result is unsurprising. Gas prices have been continuously climbing for the past eight weeks, and this is the 15th consecutive day that the AAA reading has reached a new high and the 32nd time in the last 33 days.
When the recent price hikes began on April 15, the national average was $4.07. The latest OPIS price figure reflects a 23 percent rise in less than two months.
And rising gasoline costs are creating more than just heartache at the pump for motorists. According to the government’s inflation report released on Friday, they are a major factor in consumer prices for a wide range of goods and services rising at the quickest rate in 40 years.
According to a University of Michigan survey, consumer confidence hit a new low on Friday due to rising inflation. In addition, fears over what the Federal Reserve will do to combat inflation have sent US stocks crashing in recent months, wiping out billions of dollars in personal wealth.
While a nationwide average of $5 is novel, $5 gas has grown uncomfortably normal in many parts of the country.
According to data from OPIS, which takes readings from 130,000 US gas stations and uses them to generate the AAA averages, 32 percent of stations nationally, or nearly one in every three, were charging more than $5 a gallon in readings taken on Friday. Around 10% of gas stations around the country charge more than $5.75 per gallon.
In Saturday’s reading, the statewide average was $5 or higher a gallon in 21 states plus Washington, DC.
And the rise in gas costs isn’t going to end there. With the start of the summer travel season, demand for gasoline is on the rise, and Russian oil shipments have been halted owing to the conflict in Ukraine, sending oil prices skyrocketing worldwide markets.
According to Tom Kloza, global head of energy analysis for the OPIS, the national average price of gasoline in the United States might be close to $6 later this summer.
California has traditionally had the highest statewide average, with a reading of $6.43 per gallon on Saturday. However, the effects of rising prices are felt across the country, not only in California and other high-cost states.
A supply problem, in addition to the high demand for fuel, is driving up the price of both oil and gasoline. Since Russia was one of the world’s largest oil exporters, the invasion of Ukraine by Russia and the sanctions put on Russia by the US and Europe since then has played a significant role. However, it is only a portion of the solution.
Oil output and refining capacity in the United States have not yet rebounded to pre-pandemic levels. Because European prices are considerably higher, some US and Canadian refineries that would ordinarily supply gas to the US market are now exporting it to Europe.
Despite the high price of oil, several oil firms have been sluggish in increasing output, opting instead to use their rising earnings to buy back their stock to boost their stock price. For example, ExxonMobil has revealed plans to repurchase $30 billion in stock, which is more than the company’s entire capital spending budget for the year.
