Gasoline prices in the United States, the main driver of the highest inflation rate the United States has seen in 40 years, hit a record high of $5 a gallon on Saturday. There was little to suggest they would be pulling out anytime soon, but, also on Saturday, Joe Biden said he “hasn’t decided yet” whether to travel to Saudi Arabia, a week after he opened the door to a potential trip.
Any such visit is intended to bolster ties with the country at a time when Biden is trying to find ways to bring down gasoline prices.
Much of the American right is blaming the president for the price hikes. Others blame the Russian invasion of Ukraine. Democrats accuse oil companies of price gouging.
In fact, prices have risen since April 2020, when the shock of the coronavirus pandemic drove the price of gasoline below $1.80 a gallon, according to government figures. Prices hit $3 in May 2021 and topped $4 in March.
On Saturday, the average price per gallon nationwide rose just above $5, a record, according to the AAA Automobile Club. The average price jumped 18 cents in a week and was $1.92 higher than this time last year. State averages ranged from $6.43 in California to $4.52 in Mississippi.
Global oil prices rose unevenly but sharply. The global price of crude oil nearly doubled, with the US benchmark rising roughly the same amount. On Friday, it closed at more than $120 a barrel.
There are several factors driving prices up.
The Russian invasion of Ukraine and the resulting sanctions by the United States and its allies contributed to the rise. Russia is one of the largest oil producers.
The United States is the world’s largest oil producer, but its ability to convert oil into gasoline has fallen by 900,000 barrels of oil per day since the end of 2019, according to the Department of Energy.
Oil and gasoline supplies swelled as energy consumption rose with the economic recovery. Also, Americans usually drive more starting on Memorial Day, at the end of May, which increases demand.
Analysts say there are no quick fixes, as supplies cannot be increased overnight, and if anything, global oil supplies will only tighten with sanctions against Russia. European Union leaders have pledged to ban most Russian oil by the end of this year. The United States imposed a ban.
Biden declared that “defending freedom will come at a price.”
The United States could ask Saudi Arabia, Venezuela, or Iran for help, but each option carries moral and political calculations.
Sources said Biden was planning a trip to Saudi Arabia, Europe and Israel in late June. The White House said the president feels Saudi Crown Prince Mohammed bin Salman is “a pariah” for his role in the 2018 murder of Washington Post journalist Jamal Khashoggi in Turkey. The Saudi government has denied any involvement by the Saudi government. Crown.
“We’ll see,” Biden said Saturday, when a reporter asked him later in Albuquerque, New Mexico, if he’d take a trip to the Middle East.
A White House official said Friday that the United States will not condone behavior prior to Biden’s presidency, but that it is “also important to reorient, not sever, relations with Saudi Arabia.”
Republicans have called on Biden to increase domestic oil production, for example by allowing drilling in more federal and offshore lands, or to reverse his decision to revoke a permit for a pipeline that could take Canadian oil to Gulf Coast refineries.
Democrats and environmental experts say that would undermine efforts to curb climate change. Even if Biden ignores a large faction of his party, it will be months or years before these actions lead to more gasoline at American pumps.
At the end of March, Biden announced another exploitation of the Strategic Petroleum Reserve. The average gallon price has jumped 77 cents since then, which analysts say is partly due to refining pressures.
Some refineries closed during the pandemic when demand collapsed. While a few are expected to boost capacity next year, others are reluctant to invest as the transition to electric vehicles will reduce demand.
The impact of higher energy prices more on low-income families. The National Association of Energy Aid Managers estimates that 20% of lower-income families could spend 38% of their income on energy including gasoline this year, up from 27% in 2020.
“There has to be a point where people start cutting back, and I don’t know what the magic point is,” said Patrick de Haan, analyst at gas shopping app GasBuddy. “Is it going to be $5? Is it going to be $6 or $7? That is the million dollar question. A dollar that no one knows.
On Saturday at a BP station in Brooklyn, New York, driver Nick Chavzin blamed Putin for $5.45 a gallon.
“I just cut back on some of the other things — vacations, discretionary things, things that are good to have but you don’t need,” he said. “The gas you need.”
George Chen said, “It would be painful for people who don’t get salary increases right away. I can only imagine families who can’t afford it.”
“Web maven. Infuriatingly humble beer geek. Bacon fanatic. Typical creator. Music expert.”
More Stories
Bank of Japan decision, China PMI, Samsung earnings
Dow Jones Futures: Microsoft, MetaEngs Outperform; Robinhood Dives, Cryptocurrency Plays Slip
Strategist explains why investors should buy Mag 7 ‘now’