US Pump Price of Gasoline Exceeds National Average of $5/Gallon First Time Ever - GasBuddy

WASHINGTON, (Sputnik) - The pump price of gasoline has a hit national average of more than $5 a gallon for the first time ever in the United States, tracking service GasBuddy said Thursday in its latest update on the dramatic increase in fuel prices for Americans amid inflation running at 40-year highs.

“The national average price of gas in the US surpassed $5 per gallon today for the first time ever,” GasBuddy said in a blog on its website. “This long-anticipated milestone comes behind months of gas price increases across the country, accelerated by the rise in seasonal demand amidst supply constraints borne out of the pandemic.”

GasBuddy’s quoted prices for gasoline were slightly higher than that of the American Automobile Association, or AAA, which on Thursday was still reporting a national average of $4.97.

Both services, however, indicated that pump prices had been rising virtually non-stop this year, with AAA saying that they rose 25 cents in the week to June 6, almost 60 cents from a month ago, and over $1.80 from a year earlier.

The surge in pump prices comes on the back of the global rally in crude oil prices since November. On Wednesday, London-traded Brent, the world benchmark for crude, hit almost $125 a barrel, its highest since a 14-year peak of nearly $140 on March 7.

The crude rally itself follows an uptick in energy demand in most world economies rebounding strongly from the 2020 coronavirus outbreak. The conflict in Ukraine since February, and subsequent sanctions by the West on major energy exporter Russia, have also severely reduced the supply of most energy commodities, taking their prices to multi-month or multi-year highs.

In the United States, the crisis has taken on an added dimension with the closure and downsizing of several refineries during the pandemic that has led to an even more drastic squeeze on the supply of gasoline and diesel — the main fuel that trucks, buses, trains and vessels run on.

According to industry estimates, more than 1.0 million barrels per day of US oil refining capacity — or about 5% overall — has shut since the COVID-19 outbreak initially decimated demand for oil in 2020.

Analysts say US refineries in operation now are providing only what they can — or, more accurately, what they desire — without putting additional money into expanding existing capacity or acquiring idled plants that can be reopened to provide measurable relief to consumers. One motivation for refineries to behave so: record profits from the current situation that may be diluted in an expansion. The other is the long turn-around time for any new refinery to deliver a profit.