June 14, 2022: -The average cost for a gallon of unleaded gasoline surged above $5 for the first time because of the increased demand from the economy reopening from the pandemic and depleted oil supplies arising partly from the war in Ukraine.
Analysts said that prices look ready to resume growing into the summer months.
According to AAA, the median national price struck $5.004. That’s up from nearly $3.07 a year ago and a record price not adjusted for inflation. By this week, prices had averaged $5 or more in almost 20 states, with the highest prices on the West Coast.
“By my calculations, the specific household spends about $160 more on the gas a month than a year ago,” said Mark Zandi, chief economist at Moody’s Analytics.
Gasoline prices usually peak in mid-May, but they have persisted in increasing this year, and the average cost is approximately 65 cents higher than a month ago. As the short supplies this year, analysts forecast prices may not top out until mid-July when the summer driving season traditionally peaks.
“I don’t think we’re far away” from the highest prices, said Patrick DeHaan, head of petroleum analysis at GasBuddy. “I don’t think it would eclipse $5.50. $5.25 is the top, but the market is unhinged again.”
However, he added that gasoline prices could spike if severe refinery outages this summer or disruptions from hurricanes.
Gasoline is in shorter supply than usual because the U.S. has losen about 1 million barrels a day of refining capacity since before the pandemic. Similarly, sanctions on Russian energy have sharply increased oil prices and created tight supplies of oil and fuel globally.
Analysts say while consumers are feeling pain at the pump, the price of fueling a car with gasoline is not as high a part of a household’s spending as it had been in the past. That is in part because of more efficient vehicles.
According to a CNBC, drivers were spending an estimated 20 cents per mile on gasoline as of June, even with the steep price growth. In 1980, that similar mile would have cost 30 cents in today’s dollars.