Five-dollar gas is here, get used to it.
On Saturday, AAA pegged the national average at $5.00 for a gallon of gasoline. The average price is 19 cents higher than it was a week ago, 60 cents higher than a month ago — and just about two dollars more than the $3.07 average a year ago, AAA’s data showed.
It all adds up to more pain at the pump. For instance, a driver with a 15-gallon tank is going to be shelling out $75. It will take more than $100 to fill up certain pickup trucks, like a Ford F-150, and SUVs like a Jeep Grand Cherokee, a AAA spokesman noted Saturday.
There are almost 20 states where gas costs at least $5 a gallon, AAA data shows.
AAA’s Saturday call on the national average comes two days after GasBuddy, an aggregator of pump prices,said the national average on Thursday reached the $5 per gallon price point on Thursday.
“It’s been one kink after another this year, and worst of all, demand doesn’t seem to be responding to the surge in gas prices, meaning there is a high probability that prices could go even higher in the weeks ahead,” Patrick De Haan, GasBuddy’s head of petroleum analysis, said on Thursday.***
By Saturday morning, GasBuddy had the national average at $5.01 per gallon.
In between Saturday and Thursday’s news on the new heights for gas prices, Friday offered another reminder of the high cost of living these days.
New U.S. inflation data for May showed a 1% month-over-month rise in costs of consumer goods and services, topping the 0.7% analysts expected. Gasoline was a big driver in the cost increase, rising 4.1% from April to May. Its costs have climbed 48.7% year-over-year, the Bureau of Labor Statistics said.
For May, the Bureau of Labor Statistics said the year-over-year inflation rate was 8.6%, a 40-year high. In April, the year-over-year inflation rate was 8.3%, a slight decline from a month earlier, but still at steamy four-decade highs.
The Dow Jones Industrial Average
and the Nasdaq Composite
all finished Friday sharply lower, sagging after May inflation numbers that one observer called “catastrophically bad.”
When it comes to gas prices, increased seasonal demand is on a crash course with high-priced crude oil, the biggest factor in prices. The economic consequences of Russia’s ongoing invasion of Ukraine have trimmed back global supply in a time of rising demand, GasBuddy noted. Diminished refining capacity has also ratcheted up the costs, it added.
At this point, the global economy is in a ‘critical situation,’ according to some observers.
West Texas Intermediate crude for July delivery closed Thursday at $121.51 a barrel.
Of course, gas priced at least $5/gallon has been a reality in many states already, starting with California. Drivers in the Golden State are currently paying $6.42/gallon as of Saturday, according to GasBuddy data. The rest of America could be paying those prices in a matter of months, with JP Morgan
analysts predicting $6 averages by the end of August.
But the $5 mark may carry extra psychological weight, some previous surveys have suggested. That’s the price point where drivers increasingly take steps to scale back their driving habits.
“No matter what type of vehicle someone drives, hyper expensive gasoline means having to take money from other parts of the family budget to be able to afford filling the tank for the majority of American households,” said Robert Sinclair, Jr., spokesman for AAA Northeast.
The question will be to what extent hot inflation and high gas prices will melt away summer travel and recreation plans as Americans try to leave the pandemic behind.
“It’s a perfect storm of factors all aligning to create a rare environment of rapid price hikes,” De Haan said in a Thursday statement. “The situation could become even worse should there be any unexpected issues at the nation’s refineries or a major hurricane that impacts oil production or refineries this summer.”
Guess what? The National Oceanic and Atmospheric Administration is bracing for an “above-normal” hurricane season this year.
This story was updated on June 11.