Gas prices rose above $4 per gallon on average in all fifty states for the first time in U.S. history this week.
Georgia, Kansas, and Oklahoma hung below the $4 threshold until Monday night, May 16. According to the American Automobile Association, the national average as of Thursday afternoon, May 19, sits at a record-breaking $4.589 per gallon, unadjusted for inflation.
When adjusted for inflation, this grim and costly milestone does not quite compare to gas prices in July 2008. Nevertheless, with Memorial Day weekend rapidly approaching, pain at the pump will likely continue for the foreseeable future. It may even get worse.
Andy Lipow, president of Lipow Oil Associates, told CNN to expect gas prices to creep up in the coming week.
Natasha Kaneva, JPMorgan’s head of global oil and commodities research, told CNN in an email on Tuesday, May 17, “There is a real risk the [national average] price could reach $6+ a gallon by August.”
According to a report she drafted, per Business Insider, “With expectations of strong driving demand [this summer]… U.S. retail price could surge another 37% by August.”
The price of crude oil has a significant effect on the cost of gasoline at the pump, and several global factors have caused oil prices to skyrocket.
In late February, Russia’s invasion of Ukraine elicited a litany of sanctions from the United States and its western allies. This frustrated Russia’s ability to sell its oil on the global market, thus reducing available supply and causing higher prices.
However, some analysts point out that Russia’s war in Ukraine is not the sole reason for high oil prices. According to DTN market analyst Troy Vincent, per CNET, oil companies had been putting the brakes on production many months before the conflict broke out.
The COVID-19 pandemic caused a collapse in demand for gasoline. Oil companies, in turn, reduced production. But even with market demand heading back to pre-pandemic levels, producers are wary of ramping production back up.
General inflation in the United States, the prospect of an energy crisis in Europe, and the renewal of COVID-19 lockdowns in China give the oil industry little incentive to double down on supply.
