Americans can expect increased pain at the pump as rising oil costs – combined with increased demand and reduced supply – continue to drive up prices at gas stations across the US.experts say.
The current national average price of gas has risen to $3.78 a gallon, jumping 20 cents in the past week alone, according to Patrick D. Haan, head of petroleum analysis at GasBuddy. Industry data shows fuel costs are up nearly $1 compared to last year, a blow to millions of Americans who are suffering from too much inflation.
In the United States, which has the most expensive fuel, motorists are already paying nearly $4.50 a gallon, according to price tracking. GasBuddy.
De Haan wrote on Twitter on February 28 that the average price of gas in some US cities will reach $5 a gallon “in the next two weeks.”
San Francisco on Thursday became the first US city with an average gas price of more than $5 a gallon, a more than 30% increase in one general.
“BREAK: For the first time ever, a US city has broken through the average $5/gallon per gallon. San Francisco!” De Han tweeted.
Oil prices rose by another $7 a barrel on Wednesday after an agreement between the United States and other major governmentsof their national reserves – half of which are US barrels – failed to allay supply concerns about Russia’s attack on Ukraine.
Oil prices rose again on Thursday after a new round of US sanctions targeting Russia’s oil refining sector. The price of Brent crude, the international benchmark, rose to nearly $120 a barrel – a 10-year high – before falling again to $110.46 a barrel, Reuters reported.
The decision by the IEA’s 31 member states to release oil from emergency stocks was intended to “send a strong message to oil markets” that there would be no “supply shortage” as a result of the invasion of Ukraine, but it failed to move the markets.
Oil traders were not impressed. “Markets have rejected the notion that 60 million barrels of freed strategic reserves would be the result of risks to Russian supplies,” said Tan Boon Heng of Mizuho Bank in a report. “Russia is pumping more than that in just six days,” he added.
Russia is a, representing about 12% of the global supply. Experts said any disruption to these exports is likely to push prices up at the pump for consumers almost everywhere.
“We believe the Russian-Ukrainian war will intensify global and US inflation pressures by raising oil and gas prices,” Brian Colton, chief economist at Fitch Ratings, said in an email.
Despite the sharp increase in gas prices that caused the burden of consumer spending, analysts do not currently see the recent rise in oil prices as a direct risk to the US economic recovery.
Investment bank Barclays concluded in a March report that “while persistently high energy prices pose downside risks to the outlook, we do not see them sufficient to derail the recovery.”
Fortunately, the energy price shock strikes when the US economic recovery is on a relatively solid footing, with many states removing restrictions on activity as vaccination rates increase and COVID cases decline, and labor markets have demonstrated remarkable resilience in the face of delta and Omicron variables, Economists wrote.
The Associated Press contributed to this report.