For the first time, gas prices hit $5 per gallon. This is how it happened and what lies ahead

The U.

NewsEditor
NewsEditor
13 June 2022 Monday 09:48
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For the first time, gas prices hit $5 per gallon. This is how it happened and what lies ahead

The U.S. gasoline prices have hit $5 per gallon for the first-time, and there is little relief.

According to AAA, the average national price rose to $5.004 Saturday. However, that figure is not adjusted for inflation. This milestone occurs just as peak summer driving season begins.

Given that gas prices have risen above the national average in several states including Nevada and California, this news will not surprise drivers. It is also likely that families across the country are experiencing a significant decrease in their budgets.

Analysts predict that gas prices will rise further as global factors driving up crude oil prices won't ease any time soon.

These are the four essential things you need to know.

The main drivers of the rise in gas prices are the recovery from the pandemic as well as Russia's invasion Ukraine.

Crude prices fell during the pandemic and even went negative at times, but there has been a resurgence in demand.

The hope that China, the world's largest energy consumer, will ease some restrictions and lockdowns placed during the spike in Covid-19 cases has led to oil prices rising even more recently. However, this week, China was put back on high alert.

Russia's invasion in Ukraine has also contributed to the rise in energy prices.

The U.S. and its allies have imposed a range of sanctions on Russia following the invasion. The European Union even implemented an oil ban. This is a significant step in a region that relies heavily on Russian energy exports.

After rising by more than 50% this year, Brent crude oil prices, which are the global benchmark for oil, have risen to $120 per barrel.

It's not going so well, as you can see.

Inflation has been driven by gas prices, which have risen to their highest level in almost 40 years.

Many households are feeling the pinch at the gas pumps, and they're also having to adjust.

Marlon Iberra says, for instance, that he has to now think about where he is driving in traffic-clogged Los Angeles.

He says, "It's hard to want to go anywhere on a whim like we did before."

You need to think about it. Is it worth the gas price?

He is grateful that he can work from home most of the time and commutes only two days per week.

He adds, "If I was going on a regular basis of every single morning, I'd be looking at about $100 in gasoline per week."

Recent polls consistently show that record gas prices and high inflation contribute to economic pessimism as the U.S. prepares for midterm elections in November.

It's not much.

Although President Biden stated that fighting inflation was his top economic priority, he is not able to control oil prices.

Biden announced in March that he would release as many as 180 million barrels of the country's emergency oil reserve reserves. This plan will be spread over six months.

Analysts believe the unprecedented drawdown is helping to reduce gas prices, but not enough to stop them from rising.

Biden also called for the U.S. to increase oil production, but there have been constraints on oil producers, such as insuring materials and having enough workers.

Due to the history of boom-and bust cycles in the oil industry, shareholders are also urging oil companies not to chase high prices too often.

Biden also called upon OPEC+, the oil cartel, to substantially increase prodution.

Although the group announced this month that it would increase production slightly, data shows that a few OPEC+ members are producing much less than their current allocations due to different challenges.

It is quite simple, no, except for a major unanticipated development.

The Russian oil ban is further aggravating the supply-demand imbalance in global markets for energy, and it's unlikely that this will be addressed soon.

Refineries that process crude oil into gasoline are also struggling to increase their output because the industry's total capacity has been limited by a variety of factors including insufficient investments and natural disasters.

Analysts warn Americans to be prepared for higher gas prices.

JPMorgan predicts that national average gas prices will rise to $6 per gallon by August. This is a grim sign for motorists across the country.

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