The national average gas price topped the $5 per gallon mark for the first time ever, according to GasBuddy, after months of gas price increases across the country, accelerated by the rise in seasonal demand amidst supply constraints borne out of the pandemic.
Gas prices have surged in recent weeks as U.S. gasoline inventories have fallen over 25 million barrels, or over 1 billion gallons, since the start of March amidst a global decline in refining capacity due to the Covid-19 pandemic and accelerated demand going into the summer.
The price of oil has also jumped due to escalations stemming from the Russian war on Ukraine, as countries choke off Russian oil supply via sanctions, pushing supply down at a time of rising demand. In addition, U.S. refining capacity has fallen by some 1 million barrels per day over the last three years.
All of these factors have created an environment ripe for a surge in gas prices, while Americans balk at prices but continue filling up as demand has seen little decline.
“It’s been one kink after another this year, and worst of all, demand doesn’t seem to be responding to the surge in gas prices, meaning there is a high probability that prices could go even higher in the weeks ahead,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “It’s a perfect storm of factors all aligning to create a rare environment of rapid price hikes. The situation could become even worse should there be any unexpected issues at the nation’s refineries or a major hurricane that impacts oil production or refineries this summer.”
In order to save money on summer travel, GasBuddy recommends drivers shop around for the best gas prices, and always pay with a gas card or gas rewards credit card. Drivers should also take advantage of gas station loyalty programs, and drive more cautiously in order to increase fuel efficiency.
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