Why gas prices are near $5 a gallon and how high they’ll go

MIAMI – Another day, one other report for US gas prices.

The US common for the value of a gallon of normal gas hit $4.96 in keeping with the latest studying from AAA Wednesday. It marked the twelfth straight day, and the twenty ninth time within the final 30 that gas has set a report in America.

For a lot of the nation, $5 gas is already right here.

There are now 17 states with averages of $5 or above. Idaho, Ohio and Pennsylvania turned the newest states to cross that threshold. The highest priced state stays California, with a state common of $6.39 a gallon.

The statewide common rose by at the least a penny in each state however Florida, the place prices remained basically unchanged. And as of Tuesday, 29% of the nation’s 130,000 gas stations have been already promoting gas for greater than $5 a gallon.

And the worst is but to come back for drivers.

With the summer time journey season simply getting underway, demand for gasoline, coupled with the cut-off of Russian oil shipments as a result of struggle in Ukraine, is sending oil prices greater on world markets.

The nationwide common for gasoline may very well be near $6 by later this summer time in keeping with Tom Kloza, world head of power evaluation for the OPIS, which tracks gas prices for AAA.

“Anything goes from June 20 to Labor Day,” Kloza stated in regards to the demand for gas as individuals hit the highway for long-anticipated getaways. “Come hell or high gas prices, people are going to take vacations,”

While the United States has by no means imported vital quantities of oil from Russia, the commodity is traded on world markets, and Europe was enormously depending on Russian exports. The EU’s current determination to ban oil tanker shipments from Russia as despatched oil prices hovering on these world markets.

The worth of a barrel of crude is now above $120 a barrel, up from simply lower than $100 a month in the past, And prices continued to climb in early buying and selling Wednesday. Goldman Sachs predicted the typical worth for a barrel of Brent crude, the benchmark used for oil traded in Europe, can be $140 a barrel between July and September, up from its prior name of $125 a barrel.

There are stations and states the place gas is cheaper. About 20% of stations nationwide nonetheless are promoting gas for lower than $4.50 a gallon. But even in lots of states the place gasoline is cheaper, similar to Mississippi, decrease common earnings can imply drivers must work longer to fill-up their tanks than in some high gas worth states similar to California.

How a lot are drivers prepared to pay earlier than they in the reduction of on driving? So far the variety of gallons pumped at stations within the final week of May was down solely about 5% from the identical week a 12 months in the past, although gas prices rose greater than 50% throughout the identical interval. The variety of US journeys by automobile has slipped about 5% since early May, in keeping with mobility analysis agency Inrix, though these journeys are nonetheless up about 5% because the begin of the 12 months.

The concern is that buyers will in the reduction of on different spending to maintain driving the miles they need or have to drive, which may drive an economic system already exhibiting some indicators of weak spot into recession.