Average Price for Gas Reaches Record High in U.S.

With the Memorial Day weekend fast approaching, the average price of gasoline in the U.S. has hit a record high this week, according to multiple sources.

In the past two weeks, the national average for a gallon of gasoline has risen nearly 25 cents to a record $4.36 cents per gallon, GasBuddy.com reported this week. The increase is primarily due to the high cost of crude oil, which was hovering near $100 a barrel last week and is now closing in on $110. AAA data showed similar results.

“With the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline,” said Andrew Gross, AAA spokesperson.

“These prices are creeping closer to those record high levels of early March,” Gross said, which was shortly after the Russian invasion of Ukraine.

Demand driving up prices

The Biden administration responded to the Russian-inspired oil shock by ordering the release of 1 million barrels per day from the U.S.’ strategic oil reserve to help stabilize the oil stock despite sanction on imports of oil from Russia.

According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks decreased last week. However, with the summer driving season approaching, gasoline demand increased slightly from 8.74 million barrels per day to 8.86 million barrels per day. 

Increasing gas demand and rising oil prices have pushed pump prices higher. Pump prices will likely face upward pressure as oil prices remain above $105 per barrel, according to EIA.

Oil companies score big

A report from Accountable released this week titled High Prices Make Big Oil Profits Soar, noted “in the first three months of the year, 21 oil and gas companies made over $41 billion in profits, more than doubling profits from just a year ago. This is, on average, $1.2 billion more per company than the same time last year thanks to — as the companies themselves say — high oil prices and the crisis in Ukraine.”

Accountable.US energy and environment director Jordan Schreiber said in a statement “this year is shaping up to be even better than the last for the oil and gas industry. Unfortunately for consumers, good news for Big Oil’s bottom line never seems to be good news for them.

“Make no mistake,” she added, “these oil and gas companies would rather take their billions in profits and pass them on to wealthy industry executives than do anything to stabilize gas prices for consumers.”

The Biden administration has attempted to pressure the industry by canceling or taking away unused leases for drilling on federal land in an effort to push producers to increase drilling activity — without much success.

The price of gasoline is now approaching $6 per gallon across the state of California where the average pump price is $5.82 per gallon, and higher in places such as the Bay Area. In fact, it is even more expensive than in Hawaii, where the average price at the pump is $5.28. Nevada at $5.11 per gallon is the next most expensive market followed by Washington at $4.83, Oregon at $4.81 and Alaska $4.73.

The high price of gasoline and rising energy costs generally have served as a spur to inflation, according to the Bureau of Labor Statistics. Energy costs have surged 30% in the past 12 months, the largest increase in the major categories, the Bureau reported.