National Average Gasoline Price Approaches $5 Per Gallon in the United States
When will this end?
The average price for a gallon of gasoline in the United States set another new all-time record level — this time, $4.865, according to data from the American Automobile Association, which means that the price per gallon increased by 25 cents in one week alone and is quickly approaching the next milestone of five dollars per gallon.
Another New Record High Level For National Average Gasoline Price in the United States
The national average for a gallon of gas for today, Monday, June 6, 2022 is 59 cents more expensive than a month ago; and is $1.81 more expensive than a year ago — and it is not expected to abate any time soon.
…but another factor is the continued decrease of the inventories of both gasoline and crude oil. According to data of the weekly petroleum status report from the Energy Information Administration of the United States ending as of Friday, May 27, 2022, crude oil inventories decreased again by 5.1 million barrels to a total of 414.7 million barrels, which is 64.5 million barrels — or approximately 13.5 percent — below the inventory at this time last year; and it is approximately 15 percent below the five-year average for this time of year.
Moreover, the Strategic Petroleum Reserve further decreased by 5.4 million barrels from the prior week to 526.6 million barrels — which is approximately 16.1 percent below the level at this time one year ago.
Inventories of gasoline also decreased by another 0.7 million barrels to a total of 219 million barrels, which is approximately 15 million barrels — or approximately 6.4 percent — lower than the inventory at this time one year ago; and it is approximately nine percent below the five-year average for this time of year.
Yet another factor could cause gasoline prices to become even more expensive over the next few months: the hurricane season officially began on Wednesday, June 1, 2022. Only one storm adversely affecting the oil rigs in the Gulf of Mexico — or causing at least some of them to temporarily shut down — can wreak havoc on the price of a barrel of oil.
The state with the most expensive prices for gasoline is California, where an increasing number of fuel stations are charging greater than seven dollars per gallon.
When the price of fuel increases, the cost of many goods and services also increase because the higher prices for fuel are typically passed down to the consumer. For example, food which is purchased at a supermarket or grocery store will increase in price because the food is delivered by trucks, which use fuel to transport the food. This is one contributing factor to inflation, which has been at the highest rate in almost 40 years. According to this publication from the Bureau of Labor Statistics of the United States, “The Consumer Price Index increased 8.5 percent for the year ended March 2022, following a rise of 7.9 percent from February 2021 to February 2022. The 8.5-percent increase in March was the largest 12-month advance since December 1981.”
Rising fuel costs also means that travel becomes more expensive, as more airlines implement fuel surcharges as part of the cost of airfare. Room rates at hotel and resort properties have also been increasing in price as well; and rates for rental vehicles are more costly as well.
Unfortunately, what is occurring is the simple theory of supply and demand — and with regard to gasoline and other types of fuel, demand continues to increase substantially while supply simultaneously keeps decreasing significantly.
Until this imbalance is somehow corrected — either by an increase in the supply of fuel or a decrease in demand or a combination thereof — expect the price of a gallon of gasoline to remain high for the foreseeable future…
…or even perhaps increase more, as reports speculate that the national average price for a gallon of gasoline could exceed six dollars by August of 2022 — especially if demand for fuel for motor vehicles does not wane meaningfully in the foreseeable future.
In the meantime, we need to depend less on oil and natural gas and instead use them in combination with solar, nuclear, hydroelectric, wind, and other sources of energy — whether renewable or not — to keep prices low and to avoid running out of supply…
…as well as to prevent one monopoly or oligopoly from controlling a vast majority of the energy needs of our society.