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Business

US Gas Prices Could Approach $7 a Gallon in Some States in 2023: GasBuddy

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  • Gas prices could surge toward $7 a gallon in some US states in 2023, according to GasBuddy. 
  • Cold snaps across the US and revived energy demand from China are the two key factors that could push up prices. 
  • “2023 is not going to be a cakewalk for motorists. It could be expensive,” said Patrick De Haan in a blogpost. 

Brace for a spike in US gas prices next year due to refinery disruptions and amid renewed energy demand from China as the Asian nation reopens its economy, according to GasBuddy. 

“2023 is not going to be a cakewalk for motorists. It could be expensive,” said Patrick De Haan, head of petroleum analysis at the firm, which tracks fuel costs, in its 2023 fuel outlook.

The national average price of gas at the pump could top around $4 a gallon in most major US cities as early as May next year, De Haan said, from $3.18 on Friday. Cities in the West Coast state of California, such as San Francisco and Los Angeles, could see gas prices approach nearly $7 a gallon in the summer of 2023, according to GasBuddy.

“Basically, curveballs are coming from every direction,” De Haan said. “I don’t think we’ve ever seen such an amount of volatility as we saw this year, and that will be a trend that likely continues to lead to wider uncertainty over fuel prices going into 2023,” he added.

US gas costs have retreated from the highs reached in June, when the national average topped $5 a gallon as global oil prices surged amid disruptions created by Russia’s war with Ukraine and an energy crisis in Europe. The drop came after President Joe Biden started releasing record amounts of crude from US reserves to rein in energy costs and inflation. 

According to De Haan, a rebound in gas prices is already starting in part due to the extreme cold weather conditions blanketing the US, which has caused havoc on refineries and curbed the production of gasoline and diesel. 

That means 2022 will close with a yearly national average for gasoline of $3.95 a gallon, the highest yearly average recorded, De Haan tweeted. 

“China’s reopening is a wildcard to watch in coming days/weeks,” De Haan warned in a tweet. “The window may be closing on those ultra-low prices that we’ve seen over the last couple of weeks. As China has reopened, oil prices have rebounded,” he said in a Friday interview on CNBC. 

On the whole, however, GasBuddy noted that drivers are estimated to spend 10% less on gasoline next year compared with 2022, given that the average household is likely to spend $277 less on fuel.

“What we saw in 2022 was simply madness at the nation’s fuel pumps, with records being set seemingly left and right as Covid imbalances persisted and Russia invaded Ukraine,” De Haan said in GasBuddy’s 2023 outlook report. “While it’s highly improbable that lightning strikes the same spot twice, the storm clouds over oil and refined markets may persist, and there still could be some spikes as the market remains somewhat tight.”



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Business

Southern California gas prices are skyrocketing again

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LOS ANGELES (CNS) — The average price of a gallon of self-serve regular gasoline in Los Angeles County rose for the 22nd consecutive day, increasing 7.4 cents Saturday to $5.689.

The average price has increased 44.3 cents over the past 22 days, according to figures from the AAA and Oil Price Information Service. It is 26.1 cents more than one week ago, 37.1 cents higher than one month ago, and $1.286 greater than one year ago.

The current streak of increases follows a run of 78 decreases in 80 days totaling $1.216. The average price is 77.3 cents less than the record high of $6.462 set June 14.

The Orange County average price rose for the seventh time in the last eight days, increasing 6.4 cents to $5.668. It has increased 28.4 cents over the past eight days, and is 27.9 cents more than one week ago, 45.2 cents more than one month ago, and $1.312 higher than one year ago.

The Orange County average price is 74.2 cents less than the record of $6.41 set on June 12.

“Oil Price Information Service reports that several local refineries are undergoing unplanned maintenance as fuel inventories are at their lowest levels in a decade, which caused Los Angeles wholesale gas prices to rise sharply this week,” said Doug Shupe, the Automobile Club of Southern California’s corporate communications and programs manager.

The national average price rose for the fourth consecutive day following a 98-streak of decreases, increasing 1.1 cents to $3.70. It is 1.8 cents more than one week ago, 18.3 cents lower than one month ago, and 51.1 cents more than one year ago.

The national average price is $1.316 less than the record $5.016 set June 14.

Copyright 2022, City News Service, Inc.

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Business

Gas prices tumble below $4 a gallon for first time in months

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The national average price for regular gasoline fell to $3.99 a gallon on Thursday, according to AAA.

Gas prices hit a record high of $5.02 in June as drivers filled their tanks for the summer travel season. They were also pushed higher by soaring global oil prices as the West turned its back on Russian crude in the wake of Moscow’s invasion of Ukraine.

But prices at the pump have since tumbled 21% as drivers have pared back spending and fears of a recession threatened to crimp demand. Despite the drop, they remain 25% higher than this time last year.

“The market was panicked at the start of the summer. Inventories were extremely tight,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “But the market got overcooked. It was overbought.”

De Haan said the national average could keep falling for the next five to 10 days before stalling out in the $3.70s or $3.80s. However, he noted that oil prices have started to bounce off their recent lows and hurricane season could disrupt energy supplies.

Brian Deese, director of the White House’s National Economic Council, said the drop below $4 is an important development for Americans, translating to $100 less in fuel costs for a typical family with two cars.

“That’s meaningful savings people are going to feel in their lives,” Deese told CNN in a phone interview.

Deese said the White House has been tracking gasoline prices and energy supplies “very closely” and added that prices should continue slipping.

“Pricing in the market today suggests we should see prices at the pump fall a bit more,” he said.

“Despite steadily falling gas prices during the peak of the summer driving season, fewer drivers fueled up last week,” the AAA said in a Monday press release.

“It’s another sign that, for now, Americans are changing their driving habits to cope with higher pump prices.”

Analysts say the unprecedented release of emergency oil by the United States has also helped to drive down oil and gasoline prices. In late March, the White House announced the release of 1 million barrels a day from the Strategic Petroleum Reserve for six months.

US crude oil prices have fallen sharply from a peak above $120 a barrel in June to around $92 a barrel on Thursday, helped by an easing of the global supply crunch.

In a report released Thursday, the International Energy Agency revised up its outlook for global oil supply, partly because Russia has continued to pump more oil than expected.

“While Russia’s exports of crude and oil products to Europe, the US, Japan and Korea have fallen by nearly 2.2 [million barrels per day] since the start of the war, the rerouting of flows to India, China, Türkiye and others, along with seasonally higher Russian domestic demand has mitigated upstream losses,” the Paris-based agency said.

By July, Russian oil production was only 310,000 barrels per day below pre-war levels while total oil exports were down just 580,000 barrels per day, it added.

The release of 180 million barrels of oil from the US Strategic Petroleum Reserve has also helped bump up supply.

— Matt Egan contributed reporting.

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Business

Gas Prices in the U.S. Fall Below $4 a Gallon

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Gas prices in the United States fell below $4 a gallon on Thursday, retreating to their lowest level since March, a drop that has brought relief to Americans struggling with the skyrocketing cost of everything from groceries to rent.

The national average cost of a gallon of regular gasoline now stands at $3.99, according to AAA. That’s higher than it was a year ago but still well below a peak of nearly $5.02 in mid-June. Energy costs feed into broad measures of inflation, so the drop is also good news for policymakers who have struggled to contain the price increases and for President Biden, who has pledged to lower gas costs.

The national average includes a wide range of prices, from nearly $5 a gallon in Oregon and Nevada to about $3.50 in Texas and Oklahoma. But, broadly speaking, the drop reflects a number of factors: weaker demand, because high costs have kept some drivers off the roads; a sharp decline in global oil prices in recent months; and the fact that a handful of states have suspended taxes on gasoline.

Regardless of the causes, the lower prices are a welcome change for drivers for whom the added expense — often $10 to $15 extra for a tank of gas — had become yet another hurdle as they sought to get their lives back to normal after the coronavirus pandemic.

“We have new rising diseases and inflation, and people expect a recession,” said Zindy Contreras, a student and part-time waitress in Los Angeles, where gas prices are close to $5.40 a gallon. “If I just had to not worry about my gas tank taking up $70 that’d be a huge relief, for once.”

Ms. Contreras has been filling up her 2008 Mazda 3 only halfway as a result of the higher prices, which has been costing her $25 to $30 each visit to the pump, and she had found opportunities to car-pool with friends. These days, Ms. Contreras usually gets gas twice a week, driving 15 miles to and from work each week and an additional 10 to 50 miles a week, depending on her plans.

“The affordability squeeze is becoming very real when you see these high prices at the gas pump,” said Beth Ann Bovino, the U.S. chief economist at S&P Global. “So, in that sense, it’s a positive sign certainly for those folks that are struggling.”

That cushion — cash not spent on gasoline that can go elsewhere — extends to businesses, too, particularly as the price of diesel fuel also drops. Diesel, which is used to fuel, for instance, farm equipment, construction machinery and long-haul trucks, has also fallen from a June record, though at a slower pace than gasoline prices.

The drop in the price of gas is also good news for the economy, as businesses face less pressure to pass energy costs on to their customers — a move that would add to the country’s inflation problem.

The government reported this week that consumer price inflation slowed in July to an annual rate of 8.5 percent, down from 9.1 percent in June, thanks largely to the drop in gasoline prices. If it persists, the slowdown in inflation could allow the Federal Reserve to ease up on its campaign to raise interest rates.

It would also serve as a victory of sorts for Mr. Biden, who has spent recent weeks trumpeting the drop in gasoline prices, even as he says he expects to do more to bring costs down. Mr. Biden has criticized oil companies for their record profits from high oil and gas prices, and this year he released some of the nation’s stockpile of oil in an effort to keep prices from jumping too fast.

“I’m going to keep doing what I can to bring down the price of gas at the pump,” he said at a briefing in late July.

Even as they watch prices fall, economists and consumers say they wonder if this is a temporary reversal.

“I’m not ready for it to go a little higher again and then I’m over here struggling to fill up my tank,” said Christina Beliard, a 27-year-old fashion influencer in Bridgeport, Conn.

Ms. Beliard bought a Jeep Wrangler last year but now regrets the purchase because the vehicle is not as fuel-efficient as the Toyota Camry she drove before. For work, she sometimes needs to drive to locations for her accounts on TikTok and Instagram, platforms on which she promotes brands, and to attend events in New York City, which is about 60 miles from her home.

Connecticut is one of the states that suspended their tax on gasoline through November. And Ms. Beliard, who had been spending from $95 to $100 a week to fuel up her Jeep, is now paying $74 to $80. Still, she is weary of the high tab.

“I’m trying to figure out, how long is this going to last?” she said.

That’s a difficult question to answer. More than half the cost of gasoline at the pump is determined by global oil prices, and those are volatile and subject to myriad forces, many of which are hard to predict.

Oil prices have tumbled to their lowest point since the war in Ukraine began in February, a drop that reflects the growing concern of a global recession that will hit demand for crude. There are several reasons that prices could rise again: The course of the war could further hamper global oil supplies, energy investors’ views on the economy could change and hurricanes later this year could damage Gulf Coast refineries and pipelines, choking off supplies.

For now, though, the steady drop offers a reprieve to Americans who are concerned about their finances as the economy slows.

“If gasoline prices stay at or near the levels they have reached, that would mean much more cushion for households,” Ms. Bovino said.

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Business

Gas prices will drop by up to 20c a gallon by July 4, GasBuddy says – but it will only be temporary

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Gas prices are forecast to drop by up to 20 cents per gallon ahead of the July 4 holiday, but analysts allege relief at the pump is only temporary.

Analysis by fuel price tracker GasBuddy shows a gallon of gas costs $4.91-a-gallon, as of June 25.

That is down from an all-time high of $5.03 on June 13, with GasBuddy saying they expect the price to continue to fall – but only temporarily.  

Despite the predicted decline, the reason for which has not been explained, fuel price tracker GasBuddy says Americans will pay the highest Independence Day gas prices ever.

GasBuddy experts also warn a ‘super spike’ in fuel prices is likely to occur later in the summer because the ‘volatility in markets remains high.’

The company’s latest forecast comes as President Joe Biden called Congress to suspend the federal gas tax through September – a plan Republicans oppose and even some Democrats dismiss, expressing concern the savings could end up in the pockets of oil companies instead of consumers.

Biden also called on oil companies to lower the cost of gas, arguing the nation is in a ‘time of war’ because of Putin’s invasion of Ukraine.

However, Federal Reserve Chair Jerome Powell criticized the remark and claimed Russia’s invasion of Ukraine was not the main driver of rising prices.

This GasBuddy price tracker shows that prices have begun to fall again since hitting an all-time high of $5.03 on June 13

Gas prices are forecast to drop by up to 20 cents per gallon ahead of the July 4 holiday, but analysts allege relief at the pump is only temporary. A photo taken on June 22 shows gas prices listed at over 7 dollars per gallon in Los Angeles, California

After culminating a national average fuel price of $5 per gallon just weeks ago, GasBuddy predicts U.S. gas prices will drop 10 to 20 cents a gallon by July 4.

‘It’s been a scorching summer at the pump with record prices set in every state,’ said Patrick De Haan, head of petroleum analysis at GasBuddy, said. 

‘Motorists should know that while we may see small relief today, risks remain that prices could go up at a moment’s notice and set new records again.’

De Haan noted how several external factors could quickly influence the price of fuel in America.

‘While we may see relief as we approach July 4, and potentially after, the volatility in markets remains high,’ he explained. ‘We still could see a super spike in gas prices later this summer, should a hurricane threaten Gulf Coast oil refineries or oil platforms.’

It is unclear what led to GasBuddy’s prediction of an up to 20 cent per gallon drop as the company did not immediately respond to DailyMail.com’s request for clarification.

However, prices at the pump have been ticking down slightly since their peak on June 11.

Regardless of the astronomical fuel prices, more than 58 percent of Americans are still planning to take a road trip this summer. 

Thirty-three percent of Americans polled in a recent GasBuddy survey also revealed they planned their road trip specifically over the Fourth of July holiday weekend. 

‘While we may see brief relief here and there, the high prices don’t seem to be holding many Americans back from hitting the road with the economy fully reopen,’ De Haan said. 

Independence Day weekend will mark the second most popular travel weekend of the summer, following Memorial Day which saw over 34 million Americans hit the road.

And although many plan to travel over the upcoming holiday, GasBuddy reports 70 percent of drivers allegedly changed their summer road trip plans because of the high gas prices. 

President Joe Biden called on oil companies to lower the cost of gas, arguing the nation is in a ‘time of war’

Biden tried address the fuel crisis Wednesday by calling on both Congress and oil companies to provide relief.

‘To the companies running gas stations and setting those prices at the pump, this is a time of war, global peril, Ukraine, this is not normal times. Bring down the price you are charging at the pump to reflect the price you are paying for the product,’ Biden said in a speech at the White House. ‘Do it now. Do it today. Your customers, the American people, they need relief now.’

Biden said gas prices have risen to $2 a gallon in the United States – the current average is $4.91 a gallon according to AAA – since Putin’s invasion of Ukraine. 

He and his administration have repeatedly put the blame on the Russian president, calling the high costs of goods and services ‘Putin’s price hike.’

‘We could have turned a blind eye to Putin murderous ways. The price of gas wouldn’t have spiked the way it has,’ Biden said. 

‘And it wasn’t just me. The American people understood. The American people rose to the moment. The American people did what they always had done, defend freedom around the world. They chose to stand with the people of Ukraine. We had near unanimous support in the Congress, Democrats, Republicans and independents for supporting Ukraine, knowing full well the cost,’ he said. 

The record-high inflation rate has caused prices of food, gas and housing to spike in the U.S.

Biden also called on states to temporarily suspend state fuel taxes, which are often higher than federal rates.

The administration wants Congress to suspend the federal gas tax – about 18 cents per gallon of gasoline and 24 cents per gallon of diesel – through the end of September, just ahead of the midterm elections.

Some vulnerable Democrats have been pushing for such a move ahead of the November election, which will decide control of Congress. The votes on Capitol Hill, however, may not be there.

Biden and his team have been weighing asking for a suspension for months amid increasing pressure to combat financial pain at the pump.

But experts have questioned just how much the suspension of the gas tax will save consumers – it is less than 5 per cent of the total cost at the pump.

Barack Obama, during the 2008 presidential campaign, called suspending the gas tax a ‘gimmick’ that allowed politicians to ‘say that they did something.’ 

Federal Reserve Chairman Jerome Powell broke with Biden, saying inflation was on the rise well before Russia invaded the Ukraine in February 

In his Wednesday remarks, the president also addressed his critics who blame him and his economic policies for the record high inflation, which has caused prices of food, gas and housing to spike. 

‘So for all those Republicans in Congress criticize me today for high gas prices in America. Are you now saying we were wrong to support Ukraine? Are you saying we were wrong to stand up to Putin are saying that we would rather have lower gas prices in America and Putin’s Iron Fist in Europe?,’ he said.

But in testimony on Capitol Hill on Wednesday, Federal Reserve Chairman Jerome Powell broke with Biden, saying inflation was on the rise well before Russia invaded the Ukraine in February.

Republican Senator Bill Hagerty of Tennessee asked Powell: ‘Given how inflation has escalated over the past 18 months, would you say that the war in Ukraine is the primary driver of inflation in America?’

‘No, inflation was high before — certainly before the war in Ukraine broke out,’ Powell responded. 

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Business

IRS boosts mileage rate deductions as gas prices soar to $5 a gallon

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Guy Benhamou sends a picture of gas prices to friends while pumping gas at an Exxon Mobil gas station on June 9, 2022 in Houston.

Brandon Bell | Getty Images

If you’re self-employed or own a small business, you may soon be eligible for a little relief from soaring gas prices.

Starting on July 1, the standard mileage rate — used to deduct eligible business trips in a vehicle on tax returns — increases by 4 cents to 62.5 cents per mile, according to the IRS. The new rate applies to trips during the second half of 2022.

The rate for medical trips or active-duty military moving will also increase by 4 cents, allowing eligible filers to claim 22 cents per mile. But the rate for charitable organizations remains unchanged at 14 cents.

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“The IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices,” IRS Commissioner Chuck Rettig said in a statement.

The change comes as gas prices continue to hit records, swelling to more than $5 per gallon nationally, sparked by an increased demand and shortages partially caused by the war in Ukraine.

Annual inflation grew by 8.6% in May, the highest increase since December 1981, according to the U.S. Bureau of Labor Statistics, with surging fuel costs significantly contributing to the gain. 

Midyear mileage changes are ‘unusual’

“It is unusual for the IRS to have a midyear change in the standard mileage rate,” said certified financial planner Tricia Rosen, principal at Access Financial Planning in Andover, Massachusetts.

There’s only been a half-yearly shift three times since 2008, she explained, with the most recent one in 2011. Each one happened after a spike in gas prices, she said.

It is unusual for the IRS to have a midyear change in the standard mileage rate.

Tricia Rosen

Principal at Access Financial Planning

To claim the deduction, keep good driving records

While it’s always important to track mileage, including travel dates, it will be even more critical in 2022 to make sure the correct rates apply to each trip, Rosen said. 

The standard mileage rate isn’t mandatory, according to the IRS. Taxpayers also have the option to calculate actual costs, which involves deducting a percentage of the vehicles’ total expenses. But either way, you’ll need detailed record-keeping.

“The IRS wants to see a logbook of business, medical and personal miles in order to prove that you are entitled to the deduction,” said Laurette Dearden, a CFP and CPA at the firm in her name in Laurel, Maryland. 

You’ll need to show the beginning and ending mileage, the business or medical purpose for the trip and the date in your logbook. But realistically, very few people keep these kinds of records, she said.

However, you can use mobile apps to automatically track mileage, which may make it easier at tax time, she suggests.

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Business

A gas station in California ‘turned into a circus’ after glitch only charged people 69 cents a gallon amid high prices

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A gas pump is seen at a Chevron gas station on June 09, 2022 in Houston, Texas. Gas prices are breaching record highs as demand increases and supply fails to keep up. There are now over 10 states where the average price of gasoline is $5 a gallon or higher.Photo by Brandon Bell/Getty Images

  • People flocked to a California gas station where a glitch caused a major price drop.

  • Local news reported that gas cost only 69 cents a gallon for about three hours.

  • “I’ve never seen gas this price in my lifetime; could you imagine that?” Darryl Surita told CBS 13.

People rushed to a local gas station in Rancho Cordova, California, after a glitch caused prices to drop to 69 cents a gallon.

CBS 13 reported that the glitch occurred at a Shell gas station on Thursday. When people found out, they informed their family and friends about the low price, with one person, Eddie Surita, describing the scene as turning “into a circus within a matter of minutes,” per the outlet.

Darryl Surita, who posted the low price on his Instagram, told the news station that due to the error, he only paid $14 to fill up his tank.

“I looked at the numbers and it was 69 cents a gallon,” he told the outlet. “So you know what I did, I hit that button, and it started pumping, and the dollar sign just stayed low.”

According to local news reports, the employees were unaware of the mistake for about three hours.

KTXL reported that the gas was supposed to be listed as $6.99, but the decimal point was in the wrong place. Per the outlet, gas prices in the city are almost $7 a gallon. Nationally, gas prices are skyrocketing, with a gallon of gas costing $4.97.

“I’ve never seen gas this price in my lifetime, could you imagine that?” Darryl Surita told CBS 13. “This is history right here.”

 

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US

Biden to visit Saudi Arabia next month seeking solutions as gas tops $5 per gallon: report

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The White House is set to announce that President Joe Biden will travel to Saudi Arabia, according to a report.

Biden will meet with Saudi Crown Prince Mohammed bin Salman during a visit to the region next month, the Wall Street Journal reported, citing two officials with “direct knowledge of the plans.”

The announcement could be made as early as Monday and comes amid a global oil shortage caused by the Russia’s invasion of Ukraine on February 24. After Ukraine was invaded, countries from around the world announced sanctions and an oil embargo against Russia, effectively removing its oil from the global supply.

President Joe Biden speaks to members of the media on the South Lawn of the White House in Washington, Monday, May 30, 2022, after returning from Wilmington, Del.
(AP Photo/Andrew Harnik)

The oil shortage has been a pain for Biden’s administration as it has been unable to stop rising gas prices, which just crossed $5 per gallon for the first time in U.S. history.

‘MANY DEMOCRATIC LAWMAKERS’ ARE CONCERNED BY BIDEN’S LEADERSHIP, FEEL U.S. IS ‘FALLING APART’

During his meeting with senior Saudi officials, the U.S. president is also expected to discuss the Iran nuclear deal and rising tensions in the country, according to the report.

President Biden speaks about inflation and supply chain issues at the Port of Los Angeles, Friday, June 10, 2022, in Los Angeles. 
((AP Photo/Damian Dovarganes))

Biden’s visit comes as a surprise to many on Capitol Hill as Biden has been critical of Saudi Arabia in the past and many lawmakers are critical of the country’s human rights violations as well.

“I wouldn’t go and shake his hand,” Democratic Rep. Adam Schiff said during an interview last weekend. “Until Saudi Arabia makes a radical change in terms of its human rights, I wouldn’t want anything to do with him.

“SAUDIS WOULD DEVELOP BOMB ‘THE NEXT DAY’ IF IRAN NUCLEAR DEAL LED TO WEAPONS CAPABILITY: EXPERTS

 Biden told reporters earlier on Saturday that he did not have any plans to visit the country.

Kuwaiti Crown Prince Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah R, Front welcomes Saudi Arabia’s Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud L, Front at an airport in Farwaniya Governorate, Kuwait, on Dec. 10, 2021. )
(Photo by Xinhua via Getty Images)

“Not yet,” Biden responded when asked if he had plans to travel to Saudi Arabia.

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Biden’s trip to the Middle East will also include a visit to Israel. 

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Business

U.S. gasoline average price tops $5 per gallon in historic first

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June 11 (Reuters) – The price of U.S. gasoline averaged more than $5 a gallon for the first time on Saturday, data from the AAA showed, extending a surge in fuel costs that is driving rising inflation.

The national average price for regular unleaded gas rose to $5.004 a gallon on June 11 from $4.986 a day earlier, AAA data showed.

High gasoline prices are a headache for President Joe Biden and congressional Democrats as they struggle to maintain their slim control of Congress with midterm elections coming up in November.

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Biden has pulled on numerous levers to try to lower prices, including a record release of barrels from U.S. strategic reserves, waivers on rules for producing summer gasoline, and leaning on major OPEC countries to boost output.

Yet fuel prices have been surging around the world due to a combination of rebounding demand, sanctions on oil producer Russia after its invasion of Ukraine and a squeeze on refining capacity.

DEMAND DESTRUCTION
U.S. road travel, however, has remained relatively strong, just a couple of percentage points below pre-pandemic levels, even as prices have risen.

Still, economists expect demand may start to decline if prices remain above $5 a barrel for a sustained period.

“The $5 level is where we could see very heavy amounts of gasoline demand destruction,” said Reid L’Anson, senior economist at Kpler.

Adjusting for inflation, the U.S. gasoline average is still approximately 8% below June 2008 highs around $5.41 a gallon, according to U.S. Energy Department figures.

People drive along the Governor Alfred E. Driscoll Bridge at the start of the Memorial Day weekend, under rising gas prices and record inflation, in Keasbey, New Jersey, U.S., May 27, 2022. REUTERS/Eduardo Munoz/File Photo

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Consumer spending has so far remained resilient even with inflation running at its highest level in more than four decades, with household balance sheets shored up by pandemic relief programs and a tight job market that has fueled strong wage gains, especially for lower-income workers.

Gasoline product supplied, a proxy for demand, was 9.2 million barrels per day last week, according to the U.S. Energy Information Administration, broadly in line with five-year seasonal averages.

The high prices for drivers come as major oil-and-gas companies post bumper profits. Shell reported a record quarter in May and Chevron Corp and BP have posted their best numbers in a decade. read more

Other majors, including Exxon Mobil and TotalEnergies, as well as U.S. independent shale operators, reported strong figures that have spurred share repurchases and dividend investments. read more

Numerous companies have said they will avoid excessive investment to boost output due to investors’ desires to hold the line on spending, rather than respond to $100-plus barrel prices that have persisted for months. read more

Refiners have been struggling to rebuild inventories which have dwindled, especially on the U.S. East Coast, reflecting exports to Europe where buyers are weaning themselves off of Russian oil.

Currently, refiners are utilizing about 94% of their capacity, but overall U.S. refining capacity has fallen, with at least five oil-processing plants shutting during the pandemic.

That has left the United States structurally short of refining capacity for the first time in decades, analysts said.

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Reporting by Laura Sanicola and Shivani Tanna; editing by David Clarke and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

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Business

Gasoline Prices Reach $5 a Gallon Nationwide for the First Time

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The average price of a gallon of regular unleaded gas in the U.S. hit $5 Friday night, and the rise in fuel costs is expected to persist throughout the busy summer driving season. 

The record high, according to OPIS, an energy-data and analytics provider, comes as U.S. consumer inflation hit its highest level in 40 years and crude oil prices remain high.

Gas prices skyrocketed after Russia’s invasion of Ukraine earlier this year, with traders, shippers and financiers shunning Russian oil supplies. Oil inventories, which were already tight because of higher demand from economic reopening, have depleted even more, with no sign of relief ahead.

Rising oil costs have helped push the national average price for a gallon of gasoline to $5 for the first time, and that’s leading to increased inflation pressure across the U.S. economy. Photo illustration: Todd Johnson

That has translated to pain at the pump, further squeezing Americans’ household budgets already hit by higher prices on everything from items at the grocery store to restaurant meals and air travel. Prices for energy jumped 34.6% from a year earlier, while the cost of groceries rose 11.9% on the year, adding to consumers’ woes.

Shenetha James,

a mother of four kids in Jackson, Miss., hasn’t seen her eldest daughter, who lives about 700 miles away in North Carolina, since Christmas, because of high gas prices. 

The average cost of a gallon of unleaded gas in Mississippi was still below the national average Friday, at about $4.52, according to OPIS, which is part of Dow Jones & Co., publisher of The Wall Street Journal. 

“It’s been kind of hard,” Ms. James said, “not being able to really be there.” 

Shenetha James of Jackson, Miss., hasn’t seen her eldest daughter, who lives about 700 miles away, since Christmas, because of high gas prices.



Photo:

Shenetha James

Ms. James, who works for the Mississippi Department of Child Protection Services, drives one kid to basketball practice and another to work at Chick-fil-A a few times a week. After dropping them off, to save money on gas, Ms. James waits in a parking lot instead of driving back home.

“We’ve got to manage this gas to get from one pay period to another,” she said. 

Analysts say high gas prices could persist. A report from

JPMorgan

last month said retail gas prices could jump to $6.20 a gallon by August. The cost of gas on average has already exceeded that price in California, where gas was about $6.43 on average Friday, according to OPIS. 

“People are still fueling up, despite these high prices,” said

Andrew Gross,

a spokesman at AAA. “At some point, drivers may change their daily driving habits or lifestyle due to these high prices, but we are not there yet.”

AAA, an automobile organization, obtains data from OPIS. 

Some drivers are purchasing fewer gallons on each visit to gas stations but making more frequent trips to fuel up.

Patrick De Haan,

head of petroleum analysis at price tracker GasBuddy, said consumer resilience has remained relatively strong, even as demand has started to waver. He projects people will more significantly adjust their driving habits when gas hits between $5.40 and $5.50. 

That is around the price that, adjusted for inflation, would surpass the 2008 peak for gas prices, Mr. De Haan said.

Pandemic-related strains have added pressure on gas prices.



Photo:

JACQUELINE DORMER/Associated Press

“We’re getting to the point where there’s probably a lot more demand destruction ahead as consumers come to grips with the higher fuel prices—something we’ve never seen to this magnitude,” Mr. De Haan said. 

Chris Stevenson, a 24-year-old from New Jersey, said he’s just going to ignore the prices for as long as possible.  

“I don’t care about the gas. I’m doing a lot of trips,” he said while filling up at a Manhattan gas station Friday afternoon. The average price of gas in New York City was $5.18 a gallon according to OPIS. “It’s summertime, so you know, we have to be outside,” he added. 

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Pandemic-related strains have added pressure on prices. Refineries around the world closed some plants after Covid-19-related lockdowns and travel restrictions dragged down fuel demand. Now, as demand hovers closer to prepandemic levels, the shortage of online refineries is exasperating the market and contributing to high gas prices.

President Biden has been under pressure to address rising gasoline prices. He might meet with leaders in the Middle East later this month. The potential trip comes as the Organization of the Petroleum Exporting Countries and 10 non-OPEC producers agreed last week to a larger-than-expected oil-production increase. 

Under the agreement, the oil-producing nations will raise output by 648,000 barrels a day in July and in August. 

Where in Americans’ household budgets is inflation hitting the hardest? WSJ’s Jon Hilsenrath traces the roots of the rising prices to learn why some sectors have risen so much more than others. Photo Illustration: Laura Kammermann/WSJ

The Biden administration has also tapped oil supplies from the U.S. Strategic Petroleum Reserve, releasing one million barrels of oil a day. The U.S. Environmental Protection Agency issued an emergency waiver in April allowing gas stations to sell high-ethanol-content gasoline this summer, despite environmental concerns.

Scott Solis,

a 51-year-old resident of Goodyear, Ariz., who lives on a fixed income, said he has limited his trips to grocery and retail stores because of high gas prices. 

He added that he used to go on sightseeing driving trips to Sedona and Flagstaff with his wife and friends. The average cost of a gallon of gas in Arizona was $5.31 Friday. 

“There’s no way in heck we can do that now,” Mr. Solis said.

—Ginger Adams Otis contributed to this article.

Write to Omar Abdel-Baqui at omar.abdel-baqui@wsj.com and Hardika Singh at hardika.singh@wsj.com

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