The average price of gas in the US reached $5 for the first time

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CNN Business
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for the first time At all, a gallon of regular gas is now $5 on average nationwide, according to Saturday’s AAA reading.

The record is hardly a surprise. Gas prices were steadily growing Over the past eight weeks, this latest milestone marks the 15th consecutive day the AAA reading has hit a record high, and the 32nd time in the last 33 days.

The national average was $4.07 when the current run for the price hike began on April 15. The current price reading from OPIS represents a 23% increase in less than two months.

And higher gasoline prices do more than just cause drivers a pain at the pump. It’s a major factor in the pace at which consumers pay for a full range of goods and services rising at the fastest pace in 40 years, according to the government inflation report Friday.

cause inflation Consumer confidence to hit a record low on Friday, according to a survey by the University of Michigan. worry about what Federal Reserve You will do to fight the inflation that sent the United States stock falling in the past months, erasing billions in the family fortune.

While the national average of $5 is new, $5 of gas has become annoyingly common in most parts of the country.

Data from OPIS, which collects readings from 130,000 US gas stations used to compile AAA averages, showed that 32% of stations nationwide, roughly one in three, were already charging more than $5 a gallon in readings on Friday. And about 10% of stations across the country charge more than $5.75 a gallon.

The statewide average was $5 a gallon or more in 21 states plus Washington, D.C. in Saturday’s reading.

Gas prices are unlikely to stop there. with the summer travel season Gasoline demand has begun, along with Russian oil shipments being cut off due to the war in Ukraine, and oil prices are rising in world markets.

The US national average for gasoline may approach $6 later this summer, according to Tom Kluza, global head of energy analysis at OPIS.

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

The highest statewide average has always been in California, averaging $6.43 a gallon in readings on Saturday. But the pain of high prices is being felt across the country, not just in California or other high-priced states.

That’s partly because the cheapest wasn’t exactly cheap—the $4.47 a gallon average in Georgia gives it the cheapest average price in the state. Fewer than 300 gas stations out of 130,000 nationwide were charging $4.25 a gallon or less in Friday’s reading from OPIS. For comparison purposes, prior to the price hike earlier this year, the national record average for gas was $4.11, set in July 2008.

And even in some states with cheaper gas prices, like Mississippi, lower average wages mean that Drivers there have to work longer hours To earn more money to fill their tank than drivers in some of the more expensive gas states, like Washington.

There is some early evidence that people are starting to scale back their driving in the face of higher prices, but it’s still a modest decline.

The number of gallons pumped at stations in the last week of May was down about 5% from the same week a year ago, according to OPIS, although gas prices have risen more than 50% since then. 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.

The main concern is that consumers will cut back on other spending to continue driving which could push an economy already showing signs of weakness into recession.

In addition to the strong demand for gasoline, there is also a supply problem that causes the prices of both oil and gasoline to rise. The Russian invasion of Ukraine, and sanctions against Russia in the United States and Europe since then are a major factor, with Russia being among the world’s largest oil exporters. But it is only part of the reason.

Oil is a commodity that is traded in global markets. The United States has never imported large quantities of oil from Russia, but Europe has traditionally relied on Russian exports. The last European Union The decision to ban oil tanker shipments from Russia sent Oil price hike globally.

The price of a barrel of crude oil closed above $120 a barrel on Friday, up from just under $100 a month ago. Goldman Sachs recently predicted The average price of Brent crude, the standard used for oil traded in Europe, will be $140 a barrel between July and September, up from previous demand of $125 a barrel.

Factors other than Russia’s withdrawal from the global market are limiting supply. OPEC and its allies cut oil production sharply as demand for oil collapsed in the first months of the pandemic, as many companies in the world closed and people stayed close to their homes. global oil futures contracts I traded briefly in the negative territory Because there is no space to store the glut of oil. Some oil-producing countries have reduced production in an attempt to prop up prices, and some of it Online production is back But not all of that.

Nor has US oil production and refining capacity fully recovered to pre-pandemic levels. Due to the high prices in Europe, some US and Canadian refineries that normally supply the US market with gas are exporting gasoline to Europe.

Many oil companies have been slow to increase production, despite the high price that oil can bring, and have instead used those higher profits to buy back their shares in an effort to raise the price of their shares. ExxonMobi has announced that it intends to buy back $30 billion of its stock, more than this year’s total capital spending budget.

CNN’s Matt Egan and Michelle Watson contributed to this report.