|
|
Average gasoline prices nationwide reached $4.483 a gallon on 16 May, the American Automobile Association (AAA) reported, with diesel prices climbing to $5.56.
Both prices set all-time records.
California, usually the costliest place in the U.S. to buy gas, posted an average price of $5.87.
Brent crude oil’s price rose 2.3 percent on 13 May and U.S. benchmark West Texas Intermediate was up 2.5 percent, signaling the likelihood of even higher prices ahead for the year’s primary season for driving, as people set out on vacations.
Oil prices climbed steadily last week as global reserves of gasoline continued to shrink. Production around the world has not yet caught up with post-COVID demand and the Ukraine war and resulting sanctions on Russian fuel exports have added to oil-market anxieties.
The U.S. imported only about 5 percent of its oil from Russia before banning it.
However, Russia has been the world’s third largest oil producer and second largest exporter.
To fill any fuel voids left by the Ukraine war and its sanction, U.S. refineries have boosted production for domestic use as well as to export, although they had little spare capacity.
The U.S. lost about a million barrels a day of refining capacity when some refineries shut down during the COVID War as demand for oil products crashed.
Partly as a result, U.S. gasoline inventories are at their lowest seasonal level since 2019; diesel inventory has not been this small since 2008, the Financial Times said.
American motorists will drive their way through 9.2 million barrels of gasoline every day from April to September, a 0.8-percent increase from the same period in 2021, the U.S. Energy Information Administration predicted.
“This summer, on the heels of two years of [COVID disruption] where Americans have been unable to take vacations, people will want to engage in those activities that they haven’t been able to,” AAA spokesman Devin Gladden said in an FT interview.
TREND FORECAST: Prices at the pump are an everyday indicator that hits consumers and businesses square in the pocket book.
Each time they fill up their vehicles and see how the prices have gone up, consumers will spend less on going out and in retail… and those selling goods and services will increase their prices to account for the sharply rising fuel costs. Overall it means less business and higher inflation which equals “Dragflation.”