The tight supply and uncertainty in Ukraine could cause gasoline prices to go up sharply this summer.
The peak driving season in July is when gasoline prices are going to stay high. According to Yardeni Research, households are spending more on gasoline than they did a year ago.
In a normal summer, gasoline prices peak in the middle of the month. Memorial Day weekend is the start of summer driving, with the largest number of drivers hitting the roads in July just after the Fourth of July holiday.
With inflation running at more than 8%, drivers are unlikely to catch a break this year. The price of gasoline has gone up this month as oil prices go up. According to gasoline experts and analysts, the national average for gas in August will be $6.20 per gallon.
The national average for gas was at a new high on Wednesday. Tuesday's price is 4 cents higher than it was a week ago. At this time last year, the price was $3.06 per gallon.
The goal posts are moving. Patrick DeHaan, head of petroleum analysis at GasBuddy, thinks we have a chance of getting to $5 a gallon. They talked about it. That could help get close to $5.
The average price for a gallon of gasoline was $4 in all 50 states this week, the first time that has ever happened. California has an average price of $6.05 per gallon, while Florida has an average price of $4.50.
There is a chart.
Line chart with 158 data points.The chart has 1 X axis displaying Time. Range: 2019-05-12 14:30:00 to 2022-05-15 14:30:00.The chart has 1 Y axis displaying values. Range: 0 to 5.End of interactive chart.
The head of global energy research at OPIS expects the average price to go up by $5 by peak driving. He expects the federal government and states to drop taxes on gasoline to make up for the blow to consumers.
I think gasoline is special. The Biden administration is trying to figure out how to mitigate against higher numbers. When you get above these numbers, there is a demand destruction.
If gasoline gets too expensive, consumers will cut back on driving, and that will cool the price a bit. Price gains could be slowed by an economic downturn.
The futures market fell after Target's quarterly results raised concerns about the health of the consumer. Walmart reported an earnings miss Tuesday.
John Kilduff is a partner of Again Capital. The Target earnings showed how squeezed the consumer is. There are concerns that we won't stay aloft even though we have strong demand.
Target CEO Brian Cornell blamed the price of gasoline as a factor affecting consumers. Customers are putting off buying TVs and appliances in his stores because they are spending more on luggage for travel. They are spending more on food and beverages.
Consumers are barely growing their incomes. They have accumulated a lot of savings, but they are also charging more on credit cards.
The Consumer Sentiment Index is depressed. Yardeni said in a note that retail sales have been strong during April and May. Retail sales increased at an annual rate of 8.2% in April.
The price of gasoline is influenced most by the price of oil.
Russia exported 5 million barrels a day of oil and 2.5 million barrels of refined products before the Ukrainian invasion. Sanctions by the U.S. and allies have limited Moscow's ability to sell its crude, which has led to tight supplies of everything from diesel to jet fuel.
The European Union's efforts to end Russian oil purchases is just one of many wild cards for the price of fuel, which is in tight supply due to a decline in refining capacity.
You are getting hit with two issues. There is a lack of refining capacity and a lack of refinery investment. We don't know how much Russian oil will be unavailable. We know it is unpopular. We don't know how the European sanctions will be.
It is unclear if there will be second level sanctions against countries that continue to buy Russian crude. She said they don't know if they want to cut off Europe.
9 million barrels of gasoline were used by U.S. drivers last week. That is down from 9.2 million barrels a year ago but up from 8.7 million in the previous week.
Over the last several years, the U.S. refining capacity has contracted by about a million barrels. The Philadelphia Energy Solutions refinery explosion resulted in a loss of 335,000 barrels a day at one facility.
Some refineries may switch to diesel production because of high prices of trucking fuel, but it would be limited. Diesel fuel is in short supply and the price per gallon has gone up.
There may be some hot spots in terms of availability this summer because of the tight physical markets. We don't have enough of it. It could lead to limited disruptions if there is any infrastructure that breaks this summer.
It would change the outlook for a national average of $5 per gallon to a price that could be much higher.
I think you could get into the realm of apocalyptic numbers, but you probably need a storm. When hotels are charging $400, when air fares are $700, and when it costs $100 to fill you tank, trips start to be canceled.
All Rights Reserved © 2024
