Prices at a Chevron gas station in Menlo Park, California, on Tuesday, May 24, 2022.
David Paul Morris | Bloomberg | beautiful pictures
The average price for a gallon of unleaded gasoline rose above $5 nationally for the first time ever as demand picked up from the economy reopened after the pandemic and oil supplies dried up in part due to the war in Ukraine.
Prices look set to continue rising in the summer months, analysts say.
According to AAA, The national average price hit $5,004 on Saturday. This is up from about $3.07 a year ago and a record price not adjusted for inflation. Over the weekend, prices were averaging $5 or more in about 20 states, with the highest prices on the West Coast.
“By my calculations, the typical household is spending about $160 more on gas per month than it was a year ago,” said Mark Zandi, chief economist at Moody’s Analytics. “It was a big bite.”
Gasoline prices usually peak in mid-May, but this year has continued to rise and the average price is about 65 cents higher than a month ago. Due to short-term supply this year, analysts forecast that prices may not peak until mid-July, when the summer driving season is traditionally peak.
“I don’t think we’re that far from the top,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. “I don’t think it will eclipse $5.50. I would say $5.25 is the top, but again, the market is flat.”
However, if there are any severe refinery outages this summer, or disruptions due to hurricanes, gasoline prices could spike, he added.
Gasoline supplies are lower than usual as the US has lost about 1 million bpd of refining capacity since before the pandemic. At the same time, sanctions on Russian energy have sent oil prices soaring and created a tight global supply of fuel and oil.
Analysts say while consumers feel the pain of pumping gas, the price of car gasoline doesn’t make up as large a share of a household’s spending as it once did. That is partly due to more efficient means.
According to a CNBC analysis, drivers spent an average of 20 cents per mile on gas as of June of this year, even as prices rose sharply. In 1980, that same mile would have cost 30 cents in today’s dollars.
– CNBC’s Nicholas Wells contributed to this report
