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Gas prices hit a new record high of $ 4.37 per barrel. gallon

Gasoline prices hit a new record on Tuesday, just as Americans enter the high summer season. The national average price for a gallon of gas hit $ 4.37 according to AAA, overshadowing a previous record set in early March.

The largest increases come in Michigan, New Jersey, Connecticut, Kentucky and Indiana, according to AAA. In dollars, the most expensive states for gas in the West: California, Hawaii, Alaska, Nevada and Oregon have the most expensive gasoline, with California gas averaging $ 5.82 per dollar. gallon.

Gasoline prices are rising, though the price of crude oil – its biggest input – has fallen this week, to $ 105 per gallon.

Pressure on oil refineries, which convert crude oil into petrol and other products, is behind the latest price increase. Refinery capacity in the United States has gradually shrunk, with the nation losing about 1 million barrels per day of refining capacity since before the pandemic.

“Why can oil move down but wholesale gas prices rise? Because they are different. They may be similar, but refining is crack in the hose and we are down 1 [million barrels per day] refining capacity compared to early 2019, “said Patrick DeHaan, head of petroleum analysis for GasBuddy, on Twitter.

At the same time, gasoline stocks in the United States have fallen to a 14-week low, according to data from the Energy Information Administration. ONE ban on oil and gas imports from Russiawhich shipped some refined products to the United States, also contributes to the shortage.

“The lack of refined product, finished product and intermediates coming out of Russia certainly created a shortage,” said Michael Jennings, CEO of HF Sinclair, an oil refinery, during a conversation with investors this week. “I see no sign of it ending sooner or better. So I think the pull on the U.S. refining capacity will be very strong.”

Jennings said the decline in capacity as well as crude oil supply since before the pandemic accounts for 2.5% of world consumption.

“That’s a big number,” he said.

According to Reuters, distilleries have shifted production to create more diesel and jet fuel to meet demand in Europe. This means that they produce less petrol at a time of year when gas production should normally increase to prepare for the summer’s busy driving season.

And retail gas stations are often slow to lower pump prices, even when crude oil prices fall, Robert Sinclair, senior manager of public affairs for AAA Northeast, told CBS News.

“The fluctuating oil price … especially if it fluctuates downward will not normally be reflected at the pump for some time,” Sinclair said. “Retailers tend to make money when the price drops, rather than when it rises.”

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With increasing demand as the weather gets warmer, pump prices are likely to remain high for some time. The Energy Information Administration estimates that gasoline prices will average nearly $ 4 per gallon. gallon this year.

“We are seeing demand increase as the weather gets better – it will only get worse as we shift into the summer driving season,” Sinclair said.

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