Houston — Gasoline prices reached a tough milestone on Saturday as the national average of regular gasoline reached $ 5 a gallon.
Summer gasoline is more expensive than most, due to increased fuel demand around the Memorial Day weekend. However, oil and refined fuel prices this year have risen to their highest levels in 14 years, primarily due to Russia’s invasion of Ukraine and its consequent sanctions, as well as the recovery of energy use as the economy recovers from the coronavirus pandemic. Did.
The national average price of gasoline on Saturday was $ 5, up 60 cents from a month ago. A year ago, gasoline sold for $ 3.08. According to AAA Motor club.The national average is at its highest point since March, when it surpassed it Record before that Set in July 2008, when oil was trading for over $ 133 a barrel. This is more than $ 10 above current levels, even without considering inflation. At that time, the national average gasoline price was $ 4.11, or about $ 5.37 per gallon in today’s dollars.
The average price is over $ 4 per gallon in all states.of CaliforniaIt is one of the most expensive states in the country when it comes to fuel, and prices are over $ 6 per gallon. The states with the highest recent increases in gasoline prices are Michigan, Delaware, Maryland and Colorado.
Energy experts estimate that for every penny of gasoline price increase, Americans will incur an additional $ 4 million per day.
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Tom Croza, Global Head of Energy Analysis for Oil Price Information Services, said: “The average consumer will pay $ 450 a month for fuel demand, which is just over $ 100 in 2020 during a pandemic.”
The war in Ukraine had the most direct impact on gas prices, as sanctions against Russia withdrew more than a million barrels of oil from the global market. Energy traders have also raised oil prices in anticipation of further declines in Russia’s production and exports.
However, many other factors contribute to higher prices.
Not enough capacity to refine oil into gasoline, diesel and jet fuels. Oil companies have closed several refineries in recent years, especially during a pandemic when demand plummeted. Several new refineries will be opened or expanded during the next year, which may help.
But for now, analysts have said that strong demand for gasoline has squeezed a limited supply, and drivers hit the road after several waves of new Covid-19 variants put them near their homes. It is said that it is pushing up the price because of it. Relaxing the severe pandemic blockade in China has also pushed up oil prices.
High gas prices are significant, along with rising costs for other necessities such as food and housing. Biden’s problem.. Many political experts believe that Democrats could suffer significant losses in the November elections as voters are angry and dissatisfied with high inflation.
Last week, as gas prices approached the $ 5 threshold, Biden administration officials said the president Travel to Saudi Arabia, One of the world’s largest oil producers, aims to restore diplomatic relations and ultimately seek help in lowering energy prices. He also encourages domestic producers to pump more oil, but major oil companies are reluctant to significantly increase their investment and benefit investors through dividends and share repurchase. I like to give back.
Once upon a time, when oil companies produced more oil in response to higher prices, they caused excesses and fell short of their profits.
Biden There is a little Impact on gas prices dominated by global supply and demand. Experts say that even Saudi Arabia is not in a position to sharply reduce prices because it is incapable of completely offsetting the expected decline in Russia’s production. The European Union last month agreed to ban most Russian oil by the end of the year.
In March, Mr. Biden in the United States Russia’s oil and natural gas banHe warned Americans that “it will cost money to protect freedom.” There is some evidence that high prices are beginning to affect demand. Travel experts say that some people choose to drive short distances during their vacation.
Ultimately, the high price of pumps will force drivers to switch to electric vehicles, but buying such a vehicle is expected to reduce demand over the next few years, not months.
“It will take some time for rising prices to impact demand,” said Donald Hertzmark, president of DMP Resources, a Washington-based energy consulting firm. “Consumers need to believe that price increases are realistic and permanent, and some adjustment period is required for substitution, conservation and demand destruction.”
Clifford Claus With a report from Houston Marie Solis Reported from New York.