Florida gas prices crawl toward $5

Gas prices continue to rise in Florida and nationwide.

New data from AAA shows that the average cost of a gallon of gas in our state is $4.76. That’s a cent higher than yesterday.

Most Central Florida local counties report similar averages, only Brevard showing a slightly lower average, at $4.74.

The national average is crawling around $5, at $4.86.

This is 2 cents higher than yesterday and 25 cents higher than last week.

AAA says a combination of tight global supplies and rising demand are the main reasons behind the pain at the pump.

Experts advise avoiding speeding and combining your tasks to reduce driving time and air conditioning use.

What is the reason for the price increase?

Europe abandons Russian oil

Although high inflation and slower growth are raising the specter of a recession, global oil demand is unlikely to fall enough to bring prices down, as it did in 2008.

“The concern this time – because it’s a supply-side issue – is that even if we were heading into a recession … we might not necessarily see prices at the pump drop significantly,” Smith said.

The European Union on Friday formally adopted its oil embargo, which is part of a sixth package of sanctions imposed on Moscow over its invasion of Ukraine. Most EU countries now have six months to phase out imports of Russian crude, and eight months for all other oil products.

Smith said the bloc will likely continue to buy some oil from Russia for now, but is shopping for alternative suppliers. According to Kpler data, crude oil imports from Angola have tripled since the start of the war, while Brazilian and Iraqi quantities have increased by 50% and 40%, respectively.

Getting oil from more remote locations will keep prices high, Roslan Khasawneh, chief fuel oil analyst at Vortexa, an energy data company, told CNN Business.

“The direct effect of this is the higher cost of freight due to long flights, and therefore oil delivery costs,” he said.

Governments can do some things to ease prices, including introducing fuel subsidies and setting prices at the pump. But the magic bullet the world really needs to cut prices – too much supply – is hard to come by.

Not enough alternatives

Last year, Russia accounted for 14% of global oil supply, according to the International Energy Agency, and Western sanctions against Russia are already creating a huge gap in the market. Russia shut down nearly 1 million barrels per day of oil production in April, and this could reach about 3 million barrels per day during the latter half of 2022, according to the International Energy Agency.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC+, agreed on Thursday to pump an additional 648,000 barrels of crude per day into the global market in July and August – more than 200,000 barrels – in a deal that included Russia. .

The International Energy Agency expects that global oil production, excluding Russia, should rise by more than 3 million barrels per day for the rest of this year, offsetting the impact of the sanctions.

But Smith thinks this may be difficult to achieve. He said that even before the war in Ukraine, oil producers were reducing their investment in production as they turned toward renewable energy. And OPEC has its limits.

“OPEC+ is already struggling to keep up with the current agreement – even core OPEC members like Saudi Arabia, the UAE and Kuwait exported much less last month than in April,” he said.

“Many OPEC+ member countries have already reached the limits of their production capacity,” Giovanni Stonovo, strategist at investment bank UBS, said in a note Thursday.

“This means that effective increases in production are likely to be about half of the target increase,” he said.

Strong global demand

For months, strict coronavirus lockdowns in Shanghai, Beijing and other major Chinese cities have dampened demand in the world’s largest oil importer.

But as the Chinese government begins to remove these restrictions, pent-up demand could raise prices. China could also increase its oil imports from Russia, whose benchmark crude grade is traded in the Urals at a discount of $34 a barrel compared to Brent.

Vortexa estimates that China imported 1.1 million barrels per day of seaborne Russian oil in May, about 37% more than last year’s average.

Kpler’s Smith said he did not expect demand in China to return “strongly” due to its gradual approach to deregulation.

But “the biggest bearish impact on prices has been eliminated, and then there is another reason to expect to see prices supported around current levels going forward,” he said.

Fuel demand in the US has also proven to be fairly resilient despite the amazing prices. In the week ending Saturday, the amount of gas pumped into US gas stations fell just 5% compared to the same week a year ago, according to OPIS, which tracks gasoline prices and consumption data.

That modest decline occurred with the national average price rising more than 50% year-over-year to $4.60 a gallon in late May.

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