As of Monday, June 6, the national average price per gallon of gasoline in the United States soared to new heights, $4.87 a gallon. While drivers grapple with historically high prices experts are recommending drivers brace for even further price hikes.
The state of Georgia is now the only state with an average gas price below $4.30 a gallon. In ten states, gasoline prices are now averaging $5 a gallon or higher including Michigan and Indiana. Washington D.C. is also registering gas prices above $5 per gallon.
Oil analyst, Andy Lipow, expects the national average to soar an additional 18 cents, to $5.05 a gallon, within the next ten days, according to CNN.
Gas prices have increased due to a number of factors but many point to President Joe Biden’s energy policies as the primary culprit. Russia’s invasion of Ukraine has also pushed oil prices higher and the remnants of emergency measures, enacted by various governments to combat the COVID-19 pandemic, also play a role.
No immediate cure
In an attempt to reign in surging prices the BIden Administration has released massive amounts of crude from its Strategic Petroleum Reserve (SPR) and increased ethanol blending requirements.
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Tsvetana Paraskova, writing for oilprice.com says that, “everything that the Biden Administration has done has failed to curb rising prices,” and that “experts believe that high gasoline prices are likely to persist for the foreseeable future.”
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For policymakers and consumers the only “solution” that could potentially provide relief at the pump is a recession, however a recession brings with it a whole list of other challenges.
However, the chance of a recession is rising according to investment banks and analysts.
JPMorgan warned last week that a “hurricane” may impact the economy due to moves by the Fed to start removing liquidity from the system while warning that the Russian invasion of Ukraine could send oil prices as high as $150 to $175 per barrel.
Currently, WTI and Brent crude are trading just under $120 per barrel and the recent announcement by OPEC+ concerning output increases appears to have done little to tamper the upward trend.
The surge in oil prices is being blamed in part on pent up demand following the COVID-19 pandemic and producers are struggling to meet that demand.
The U.S. continues to pump less oil than it did prior to the pandemic.
According to Patrick De Haan, head of petroleum analysis at GasBuddy, there is no relief in sight.
“After a blistering week of gas prices jumping in nearly every town, city, state and area possible, more bad news is on the horizon. It now appears not if, but when, we’ll hit that psychologically critical $5 national average,” he said.
De Haan continued, “Gasoline inventories continue to decline even with demand softening due to high prices, a culmination of less refining capacity than we had prior to Covid and strong consumption, a situation that doesn’t look to improve drastically anytime soon.”
Inventories of motor gasoline in the U.S. are now nine percent below the five-year average.
Distillate fuel inventories, which include diesel, are a whopping 24 percent below the five-year average which is contributing to diesel prices increasing dramatically. On June 6, diesel also set a new record at $5.65 per gallon.