Even before Russia’s invasion of Ukraine, US gas prices were rising rapidly – and are now moving to a national average of $ 4 a gallon or more in the coming months, with the crisis showing no signs of weakening.
As sanctions isolate Moscow and restrict Russian energy supplies, sharply rising crude oil and gas prices will affect consumers and businesses, which are already facing the highest inflation rates since 1982. Thursday Brent (CL = F) briefly flirting with $ 120 a barrel of US oil (MCL = F) is not far behind at $ 116.
“I wish we had reached the top. I think we are far from that. “Unfortunately, gas prices are rising by an average of 25 to 75 cents a gallon a year between March and Remembrance Day,” Patrick De Haan, head of oil analysis at GasBuddy, told Yahoo Finance Live this week.
On Monday, the national average was $ 3.61 a gallon, according to the AAA. By comparison, the average price of gas in the United States was about $ 2.65 a year ago.
In California, where prices now average $ 4.82 a gallon – 5 cents more than last week – the situation is grim. A year ago, the average price of a pump in Golden State was about $ 1.16 cheaper.
Los Angeles and several other areas in Southland are following a trend above record highs. The average price of ordinary gas has already reached $ 4.89 per gallon in the Los Angeles area. This is the 22nd record in the last 25 days. It is also 10 cents higher than last week and about $ 1.14 more than a year ago.
‘Blown away’
Gas prices in Los Angeles
At a Chevron gas station in Los Angeles County, customers pay $ 6.25 a gallon over the weekend, forcing them to dig deeper into their pockets at the pump.
“I am just overwhelmed, as if I could not imagine that we would arrive so quickly. This is really surprising, “Janine Pibal, a resident of Los Angeles County, told Yahoo Finance in an interview.
However, a defining feature of the current inflationary environment is consumers who complain but ultimately pay for goods and services that have recovered to higher levels. As a result, some drivers in California are reluctant to jump on gasoline, even if only for personal or professional driving needs.
The story continues
“My car pays my bills because if I don’t, I can’t get to work, so it’s kind of like the cost of doing business,” Alejandro Vazquez, a Los Angeles County resident, told Yahoo.
While gas is becoming more expensive across the country, it is significantly more so in California, given the combination of taxes and fees that make fuel costs among the highest in the nation. The state imposes a tax of 51.1 cents on every gallon of gas, second only to the tax in Pennsylvania of 58.7 per gallon.
But California’s driving culture and the demand it creates set it apart from most other states, along with other factors.
“The whole west coast as a whole is much more expensive than much of the rest of the country. You are relatively isolated refineries on the West Coast [and] there aren’t that many when there are problems, “said De Haan of Gas Buddy.
At the same time, Golden State has a containment and trading program that requires large greenhouse gas emissions such as oil and gas refineries to offset emissions by purchasing carbon credits.
The California Air Resources Council also requires gas stations to sell only specific gasoline blends formulated to minimize pollution. This mixture is more expensive to produce, adding another price that is passed on to drivers.
“There is a lot of fragmentation between the types of summer gasoline, which only tighten prices even more. [A] a good reminder of what lies ahead is the transition from growing demand when Americans return abroad and, of course, the refinery maintenance season, ”De Haan said.
Late last year, President Joe Biden announced that the Department of Energy would release 50 million barrels of oil from the country’s strategic oil reserves “to reduce prices for Americans and address the mismatch between pandemic demand and supply.” but with little effect this week, the International Energy Agency announced a similar move, which also failed to reduce spot energy prices.
Lawmakers are calling on the White House to stabilize gas prices by re-releasing SPR stocks, but geopolitical realities are likely to complicate matters.
“You need a nuclear deal with Iran to ease sanctions against Iran. “Then the 2 million barrels they produce can go back to the world market,” De Haan suggested.
The White House is working to reach a deal, but De Haan said “you will need Saudi Arabia and potential help from the UAE to increase production.” especially with Western governments, which are aiming to sanction the country’s energy sector.
It could still become “more messy” in terms of higher oil prices, De Haan said.
Danny Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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