May 28, 2024


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Why are gas prices close to $5 a gallon and how high

Why are gas prices close to $5 a gallon and how high

The average price of a gallon of regular gas in the United States was $4.96 according to the latest reading from AAA on Wednesday. It was the 12th day in a row, and the 29th time in the last 30 that gas had set a record in America.

For most of the country, $5 of gas is already there.

There are now 16 states plus Washington, D.C. averaging $5 or more. Idaho, Ohio, and Pennsylvania are the latest states to cross this line. California remains the highest priced, with a state average of $6.39 per gallon.

The statewide average rose at least a penny in every state except Florida, where prices remained essentially unchanged. As of Tuesday, 29% of the nation’s 130,000 gas stations were already selling gas for more than $5 a gallon.

and the The worst is yet to come for drivers.
with the summer travel season Initially, the demand for gasoline, along with the cutting off of Russian oil shipments due to the war in Ukraine, drove up oil prices on world markets.

The national average for gasoline could approach $6 by later this summer according to Tom Cluza, global head of energy analysis at OPIS, which tracks gas prices for AAA.

“Anything goes from June 20 to Labor Day,” Kloza said of gas demand, as people hit the road for long-awaited holidays. “Come to hell or high fuel prices, people will take vacations”

While the United States has never imported large quantities of oil from Russia, the commodity is traded on world markets, and Europe has been highly dependent on Russian exports. The last European Union The decision to ban oil tanker shipments From Russia also sent Oil price hike in those global markets.
Crude is now above $120 a barrel, up from just under $100 a month ago, and prices continued to climb in early trading on Wednesday. Expect Goldman Sachs The average price of Brent crude, the benchmark used for oil traded in Europe, will be $140 a barrel between July and September, up from previous demand of $125 a barrel.
There are stations and states where gas is cheaper. About 20% of stations nationwide still sell gas for less than $4.50 a gallon. But even in many states where gasoline is cheaper, like Mississippi, lower average incomes can mean drivers have to do so. Work longer to fill their tanks than in some states with higher gas prices like California.

How much are drivers willing to pay before they cut back? So far, the number of gallons pumped into stations in the last week of May is only about 5% down from the same week last year, despite gas prices rising more than 50% over the same period. Car trips to the US are down about 5% since early May, according to mobility research firm Inrix, although those trips are still up about 5% since the start of the year.

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The concern is that consumers will cut back on other spending to continue driving for the miles they want or need, which could push an economy that is already showing some signs of weakness into a recession.

– CNN’s Matt Egan contributed to this report