Motorists hoping for some aid on the pump ought to assume once more.
Gasoline costs nationally may attain $5 a gallon on common by as early as June 17, based on Patrick De Haan, an analyst for GasBuddy, which tracks gas prices throughout the nation. That is up from the present nationwide common of $4.62 a gallon, already a file excessive, based on AAA.
People are paying record-high costs for gasoline because the summer season journey season arrives — a difficulty that is weighing on customers as they make their trip plans greater than rising COVID-19 charges, based on a brand new survey from Morning Seek the advice of. At a handful of stations in California, gas now tops the federal minimal wage of $7.25 per hour.
What's driving costs
A spread of things are combining to maintain gas costs excessive. That would equate into months of economic ache for thousands and thousands of U.S. households, with the everyday driver spending an annual fee of about $4,800 on fuel, up from $2,800 a yr in the past.
The benchmark Brent crude oil is now buying and selling at about $118 per barrel, or 71% larger than a yr earlier, based on FactSet. Demand from customers and companies has spiked because the economic system recovered from the preliminary COVID-19 pandemic, however refineries aren't maintaining with demand.
In the meantime, Russia's warfare in Ukraine is pushing costs larger because the U.S. and different nations limit purchases of Russian vitality merchandise. This week, European Union leaders agreed to embargo most Russian oil imports to members of the buying and selling bloc by year-end.
The Biden administration has tried to decrease fuel costs by tapping the nation's Strategic Petroleum Reserve. However that might solely achieve this a lot, De Haan famous.
"There's the temptation to assume an American politician can do one thing, however they do not have management over the worldwide levers of provide and demand," De Haan informed CBS MoneyWatch. "Take a look at the Strategic Petroleum Reserve — that regarded like an enormous announcement, however costs saved going up."
$6 a gallon by August?
Drivers might be paying a median per-gallon value of $6.20 by August, based on JPMorgan analyst Natasha Kaneva in a Could 17 report.
Like De Haan, Kaneva defined the surge in fuel costs by pointing to decrease provide and better demand. Refineries normally produce extra fuel in anticipation of a rise in demand through the summer season. However fuel inventories within the U.S. are declining, and now sit at their lowest seasonal ranges since 2019, she famous.
"U.S. customers mustn't anticipate a lot in the way in which of aid in costs on the pump till the tip of the yr," Kaneva predicted.
Nonetheless, solely about half of People say they're reducing again on driving as a result of excessive price of fuel, based on a GOBankingRates survey.
One motive that many drivers might not be reducing again: Immediately's gas costs are nonetheless under their peak in 2008 on an inflation-adjusted foundation. In immediately's dollars, the 2008 value was nearer to $5.25 a gallon.
As costs on the pump soar, some U.S. states are attempting to ease the ache. Beginning June 1, New York will droop its 16 cents per gallon fuel tax by way of the tip of the yr. Connecticut, Georgia and Maryland have additionally quickly lifted their fuel taxes, whereas different states are contemplating suspending them.