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In the latest AAA estimate, a gallon of normal gas costs $5 on average for the first time ever. It is hard to believe the results. For the last eight weeks, gas prices have been continuously climbing, and this newest milestone represents the 15th consecutive day that the AAA gauge has reached a new high and the 32nd time in the last 33 days.
When the current price increase cycle started on April 15, the national average was $4.07. The latest OPIS price reading has increased by 23 percent in less than two months.
And rising gas costs are generating more than just headaches for drivers at the pump. According to the government’s inflation report released Friday, they are a major driver in consumer prices for a wide range of goods and services increased at the quickest rate in 40 years.
According to a survey by the University of Michigan, consumer confidence touched a new low on Friday due to inflation. Concerns over what the Federal Reserve would do to combat inflation have led US markets down in recent months, wiping out billions of dollars in household wealth.
While a national average of $5 is novel, $5 gas has become all too common 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 roughly one out of every three, were charging more than $5 per gallon in readings taken on Friday. Around 10% of gas stations in the United States charge more than $5.75 per gallon.
In the reading on Saturday, the statewide average was $5 or more per gallon in 21 states plus Washington, DC.
And the rise in petrol costs shows no signs of slowing down. On the contrary, 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, driving up oil prices on worldwide markets.
According to Tom Kloza, global head of energy analysis for the OPIS, the US national average for gasoline might reach close to $6 this summer.
California has traditionally had the highest statewide average, with Saturday’s readings at $6.43 per gallon. However, the cost of living is rising across the country, not only in California and other high-cost areas.
A supply problem is driving up the price of both oil and gasoline, in addition to the high demand for gasoline. Since Russia was one of the world’s largest oil exporters, the invasion of Ukraine by Russia and the sanctions imposed by the US and Europe since then has played a significant role. However, that is only one aspect of the problem.
Oil output and refining capacity in the United States are still not back to pre-pandemic levels. However, because European prices are considerably higher, some refineries in the United States and Canada that would typically supply gas to the US market are now exporting it to Europe.
Despite the high price of oil, several oil firms have been hesitant to increase output, preferring to use their rising earnings to buy back their stock in order to boost their stock price. For example, ExxonMobil has announced that it will buy back $30 billion worth of stock, which is more than the company’s whole capital spending budget for the year.