Gas prices are returning close to record highs

The state average for regular gasoline rose to $ 4,328 a gallon on Monday, according to AAA. That’s just a fraction of the penny of the top $ 4,331 of all time posted on March 11th.

Gas prices have risen 13 cents over the past week and are well above the recent low of $ 4.07 a gallon.

Prices at the pump were already high in 2022 as supply failed to recover from Covid-19 as quickly as demand. Russia’s invasion of Ukraine in late February led to a significant increase as investors prepared for oil supply disruptions caused by the war and the embargo on Russian energy.

The Biden administration responded by releasing a record amount of oil from U.S. oil supplies for emergencies, a move that helped cool oil and gasoline prices.

But as industry analysts warned at the time, relief from the emergency oil spill was fleeting and relatively small. The national average for ordinary gas today is about 23% higher than the day before the invasion of Ukraine.

Here comes the $ 4.50 petrol?

The recent jump in pump prices may not be done.

Gasoline futures reached record highs on Friday. Andy Lipow, president of Lipow Oil Associates, told CNN he expects retail prices to climb another 18 to 20 cents over the next 10 to 14 days, reaching a new record of $ 4.50 a gallon.

Although nominal gas prices are close to record prices, inflation-adjusted prices are not. The state average should climb above $ 5.30 a gallon to beat the inflation-adjusted record set in 2008, according to the U.S. Energy Information Administration.
Despite this, high gas prices are contributing to Americans ’gloomy views on the economy. Only 23 percent of them rate economic conditions as even somewhat good, down from 54 percent last April, according to a CNN poll released last week. This is the lowest since November 2011. And only 34% of Americans approve of President Joe Biden’s behavior in the economy.

As another blow to the outlook for inflation, diesel prices are rising.

The state average for diesel on Monday reached another record of $ 5.54 per gallon, an increase of 22 cents a week and 49 cents a month, according to the AAA. Diesel drives trucks that transport goods across the country, and the high transportation costs are likely to be at least partially passed on to consumers.

Europe is discussing a ban on Russian oil

The good news is that the oil market, which is setting the pace for petrol and diesel, is venting. U.S. oil fell 2% to $ 107.54 a barrel in recent trading on Monday morning. Brent fell 1.7 percent to $ 110.42 a barrel.

However, oil prices remain high, and the aftermath of the war in Ukraine continues to cast a shadow over the energy market.

Over the weekend, G7 leaders pledged to phase out or ban Russian oil imports “in a timely and orderly manner, and in a way that gives the world time to secure alternative supplies.”
The European Union is also continuing discussions on a proposed ban on oil imports from Russia by the end of this year.

Rystad Energy warned on Monday that the European embargo on Russian oil would “trigger a seismic shift” in energy markets and boost oil prices in the short and medium term.

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