Gasoline prices in the U.S. surged to new all-time highs as the cost of refueling increased due to reduced capacity at refineries.
The average price of a gallon of regular gasoline rose to $4.43. AAA. This is an increase from $4.08 a month ago and $3 in May last year, and energy costs are rising. All over the country for the first time in 40 years. Premium gasoline now averages $5.07, up from $3.62 a year ago, while diesel jumped from $3.15 to $5.56 during that time.
Gasoline prices are now above $4 a gallon in almost every US state, according to the AAA, with fuel prices rising the most this week in Michigan, New Jersey, Connecticut, Kentucky and Indiana. The states with the highest gas prices are West Coast California ($5.87 per gallon), Hawaii ($5.31), Alaska ($4.81), Nevada ($5.13) and Oregon ($4.90).
The cheapest countries are Georgia ($3.95), Kansas ($3.98), and Oklahoma ($3.99).
Crude oil prices, which have the biggest impact on gasoline prices, have gone up and down this week. Brent, the international standard, rose to $110.71 a barrel on Friday, according to FactSet. The US benchmark, West Texas Intermediate crude, rose to $109.54.
A decline in refineries is also driving up prices. Refinery converts crude oil into gas and other products. Since 2019, U.S. refinery capacity has decreased by approximately 1 million barrels per day.
“Can oil prices go down but wholesale gas prices go up? Because they are different. They may be similar, but refining is a kinks of hoses and we are falling 1 [million barrels per day] GasBuddy’s head of petroleum analysis, Patrick DeHaan, said on Twitter this week that “refining capacity vs. early 2019.”
At the same time, U.S. gasoline inventories fell to a 14-week low, according to data from the U.S. Energy Information Administration (EIA). allSome of the refined products were sent to the US, but they are also contributing to the shortage.
“The shortage of refined products, finished products and intermediates coming from Russia has certainly created a shortage,” Michael Jennings, CEO of refinery HF Sinclair, told investors this week. “I don’t see any sign of ending any time soon. So I think the attraction for the US refining ability will be very strong.”
Jennings said declines in production capacity and crude oil supply since pre-pandemic accounted for 2.5% of global consumption.
“It’s a big number,” he said.
According to Reuters, the distillery also changed production to produce more diesel and jet fuel to meet European demand. This means we’re producing less gas at a time when production typically needs to increase to prepare for the busy summer driving season.
AAA Northeast’s senior public relations manager, Robert Sinclair, told CBS News that retail gas stations are often slow to lower their pump prices, even as oil prices fall.
“Those fluctuating oil prices … especially if they fluctuate downwards, generally won’t be reflected in the pump for a while,” he said. “Retailers tend to make money when prices go down than when they go up.”
Pump prices will remain high for a while as driving demand increases as the weather warms. Energy Information Administration estimate Gasoline prices this year will average around $4 per gallon.
“We’re seeing an increase in demand as the weather gets better, and it’s going to get worse as we move into the summer driving season,” Sinclair said.