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05/17/2022

Gas Prices Pass $4-per-Gallon Milestone Across the U.S.

The national average for a gallon of regular gas reached $4.48 on May 16.
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Gas Prices

NATIONAL REPORT — Just three states — Georgia, Kansas and Oklahoma — are the remaining holdouts when it comes to crossing the $4 average price for a gallon of regular gas. The national average reached $4.48 per gallon on May 16, which is 40 cents more than a month ago, and $1.43 more than a year ago, according to AAA.

The increase is primarily due to the high cost of crude oil, which is hovering near $110 a barrel.

"The high cost of oil, the key ingredient in gasoline, is driving these high pump prices for consumers," said Andrew Gross, AAA spokesperson. "Even the annual seasonal demand dip for gasoline during the lull between spring break and Memorial Day, which would normally help lower prices, is having no effect this year."

Any respite in gas prices is not likely to come soon. The switch to the more expensive summer blend of gasoline, which usually adds 7 to 10 cents per gallon depending on the market, is happening now, AAA stated. This switchover should be complete nationwide by early June.

This summer blend switch is an annual event. It is unrelated to the Biden Administration's announcement a few weeks ago to allow the higher ethanol E15 gas blend to remain on sale throughout the summer until September.

According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks decreased by 3.6 million barrels to 225 million barrels last week. Gasoline demand also decreased slightly from 8.86 million barrels per day to 8.7 million barrels per day. Typically, lower demand would put downward pressure on pump prices. However, crude prices remain volatile, and as they surge, pump prices follow suit. Pump prices will likely face upward pressure as oil prices stay above $105 per barrel, AAA concluded.

The nation's top 10 largest weekly increases were seen in Florida (29 cents per gallon), New York (24 cents), Illinois (23 cents), Kentucky (23 cents), New Hampshire (22 cents), Connecticut (21 cents), Massachusetts (20 cents), Ohio (19 cents), Maine (19 cents) and Indiana (19 cents).

The nation's top 10 most expensive marketscurrently are California ($5.98 per gallon), Hawaii ($5.31), Nevada ($5.17), Washington ($5.03), Oregon ($4.99), Alaska ($4.88), Washington, D.C. ($4.83), Illinois ($4.82), New York ($4.75) and Arizona ($4.75).

At the close of the May 13 formal trading session, West Texas Intermediate increased by $4.36 to settle at $110.49 per barrel. At the beginning of the week of May 9, the price of crude oil decreased due to global market concern that crude demand will suffer as COVID lockdowns in China remain in place.

However, crude prices reversed course at the end of the week over growing market worries that Ukrainian and European Union actions against Russian oil and natural gas companies could spark retaliation by Russia, which would lead to more market disruption and uncertainty.

Crude prices could fall this week if demand concerns continue to weigh the market down, according to AAA. Additionally, EIA reported that domestic crude supply increased by 8.5 million barrels to 424.2 million barrels. The current level is approximately 12.5 percent lower than during the first week of May 2021.