Not only did the average price for a gallon of gasoline in the United States set another new all-time record level yesterday, Saturday, June 11, 2022; but it also breached a new plateau of five dollars per gallon — this time, $5.004 yesterday and $5.010 today, Sunday, June 12, 2022, according to data from the American Automobile Association, which means that the price per gallon is now on its way towards the next milestone of six dollars per gallon.
National Average Gasoline Price Exceeds $5 Per Gallon in the United States
The national average for a gallon of gas is at least 66 cents more expensive than a month ago; and is $1.81 more expensive than a year ago — and it is not expected to abate any time soon.
None of the 50 states have an average price below $4.00 per gallon of gasoline, which is a milestone that had never happened in the United States until Wednesday, May 18, 2022 — and the continuing unrelenting surge in the price of a gallon of gasoline may eventual lead to the first time where none of the 50 states have an average price below $5.00 per gallon.
Factors which have converged and have been cited to contributing to fuel prices substantially rising in the United States include the hostile invasion of Ukraine by armed military forces of Russia, the 2019 Novel Coronavirus pandemic, increased demand for fuel as the start of the summer driving season starts, “stupid energy politics”, and the switch to summer blend gasoline from the winter version of the fuel.
Significant inflation is another factor, as the headline inflation number for May of 2022 was reported on Friday, June 10, 2022 at 8.6 percent annualized, which is the highest it has been in 40 years and has been causing fears of a phenomenon known as stagflation — which describes an environment of the combination of slowing or stagnant economic growth, jobs losses, and inflation — which occurred during the 1970s and had sent the stock markets tumbling as a result…
…but yet another factor is the continued decrease of the inventories of both gasoline and crude oil. According to data of the weekly petroleum status report from the Energy Information Administration of the United States ending as of Friday, June 3, 2022, crude oil inventories actually increased by 2.1 million barrels to a total of 416.8 million barrels, which is 64.5 million barrels — or approximately 13.5 percent — below the inventory at this time last year; and it is approximately 15 percent below the five-year average for this time of year.
Moreover, the Strategic Petroleum Reserve further decreased by 7.3 million barrels from the prior week to 519.3 million barrels — which is approximately 16.1 percent below the level at this time one year ago.
Inventories of gasoline also decreased by another 0.8 million barrels to a total of 218.2 million barrels, which is approximately 15 million barrels — or approximately 6.4 percent — lower than the inventory at this time one year ago; and it is approximately nine percent below the five-year average for this time of year.
Yet another factor could cause gasoline prices to become even more expensive over the next few months: the hurricane season officially began on Wednesday, June 1, 2022. Only one storm adversely affecting the oil rigs in the Gulf of Mexico — or causing at least some of them to temporarily shut down — can wreak havoc on the price of a barrel of oil.
The state with the most expensive prices for gasoline is California, where an increasing number of fuel stations are charging greater than seven dollars per gallon — including two which charge greater than $8.00 per gallon and a Chevron fuel station in Mendocino which currently charges $9.94 for a gallon of premium gasoline.
When the price of fuel increases, the cost of many goods and services also increase because the higher prices for fuel are typically passed down to the consumer. For example, food which is purchased at a supermarket or grocery store will increase in price because the food is delivered by trucks, which use fuel to transport the food. This is one contributing factor to inflation, which has been at the highest rate in almost 40 years. According to this publication from the Bureau of Labor Statistics of the United States, “The Consumer Price Index increased 8.5 percent for the year ended March 2022, following a rise of 7.9 percent from February 2021 to February 2022. The 8.5-percent increase in March was the largest 12-month advance since December 1981.”
Rising fuel costs also means that travel becomes more expensive, as more airlines implement fuel surcharges as part of the cost of airfare. Room rates at hotel and resort properties have also been increasing in price as well; and rates for rental vehicles are more costly as well.
Things could be worse: the price for a gallon of gasoline is $11.213 per gallon in Hong Kong, which is currently the most expensive price per gallon in the world.
Final Boarding Call
The slight increase of 2.1 million barrels in the inventories of crude oil would ordinarily be a possible good sign that the prices for fuel could possible stabilize — but demand continues unabated; so I am not getting my hopes up of saving money at the gasoline pump any time soon.
I have felt the financial pain at the gasoline pump myself: filling the tank of this 2022 Ford Edge — which I have not only rented but also spent the night in it because of a disgusting hotel property — cost approximately $65.00, which is the first time in my life I ever paid that much for one tank of fuel…
…and that occurred in Georgia, which is one of the states in the United States with the least expensive fuel primarily due to the tax on gasoline being temporarily suspended by Brian P. Kemp — who is the current governor of that state — and that suspension has already been extended through Thursday, July 14, 2022.
Unfortunately, what is occurring is the simple theory of supply and demand — and with regard to gasoline and other types of fuel, demand continues to increase substantially while supply simultaneously keeps decreasing significantly.
Until this imbalance is somehow corrected — either by an increase in the supply of fuel or a decrease in demand or a combination thereof — expect the price of a gallon of gasoline to remain high for the foreseeable future…
…or even perhaps increase more, as reports speculate that the national average price for a gallon of gasoline could exceed six dollars by August of 2022 — especially if demand for fuel for motor vehicles does not wane meaningfully in the foreseeable future.
In the meantime, we need to depend less on oil and natural gas and instead use them in combination with solar, nuclear, hydroelectric, wind, and other sources of energy — whether renewable or not — to keep prices low and to avoid running out of supply…
…as well as to prevent one monopoly or oligopoly from controlling a vast majority of the energy needs of our society.
Finally, please read this article which pertains to 5 Ways to Save Money on Fuel. You could save a few dollars every time you fill up your fuel tank — and that can add up rather quickly.
All photographs ©2022 by Brian Cohen.
