The national average gas price has reached $5 a gallon and “prices could go even higher,” says Gas Buddy

Five dollar gas is here, get used to it.

This is acc GasBuddya pump price aggregator, who said the national average hit the $5/gallon price point on Thursday.

“This year has been one dip after another and worst of all demand seems unresponsive to the rise in gas prices, meaning there is a high probability that prices could rise even further in the coming weeks,” said Patrick De Haan , Head of Petroleum Analysis at GasBuddy. The median price dropped to $4.98 later Thursday, according to GasBuddy’s real-time ticking average. But that’s just a snapshot.

Thursday’s national average of AAA was at $4.97, but a spokesman told MarketWatch the organization expects the average to hit the $5 mark over the weekend. There are nearly 20 states where gasoline costs at least $5 a gallon, AAA data shows.

It all comes a day before another reminder of the high cost of living these days.

On Friday, the Bureau of Labor Statistics is due to release inflation data for May, and analysts are forecasting a 0.7% monthly increase in the cost of consumer goods and services. In April, the year-on-year inflation rate was 8.3%, down slightly from the previous month but still at a hot four-decade high.

The Dow Jones Industrial Average DJIA,
S&P 500 SPX,
and the Nasdaq Composite COMP,
all ended significantly lower on Thursday as investors sweated over Friday’s upcoming inflation data.

For gas prices, increased seasonal demand is on a crash course with high-priced oil, the biggest price driver. The economic fallout from the ongoing Russian invasion of Ukraine has cut global supply at a time of rising demand, GasBuddy noted. Reduced refining capacity has also pushed up costs, she added.

At this point, according to some observers, the global economy is in a “critical situation”.

West Texas Intermediate crude for July delivery closed at $121.51 a barrel on Thursday.

Of course, gas prices of at least $5/gallon are already a reality in many states, starting with California. According to GasBuddy data, drivers in the Golden State are currently paying $6.39 per gallon. The rest of America could pay those prices in a matter of months, with JP Morgan JPM,
Analysts are forecasting an average of $6 by the end of August.

But the $5 mark may carry additional psychological weight, as some previous polls have suggested. This is the price point where drivers are increasingly taking steps to reduce their driving habits.

The question will be to what extent hot inflation and soaring gasoline prices will melt away summer travel and recreation plans as Americans try to emerge from the pandemic.

“It’s a perfect storm of factors, all aligned to create a rare environment of rapid price increases,” De Haan said in a statement Thursday. “The situation could get worse if there are unexpected problems at the country’s refineries or a major hurricane that affects oil production or refineries this summer.”

Guess what? That National Oceanic and Atmospheric Administration is preparing for an “above average” hurricane season this year. The national average gas price has reached $5 a gallon and “prices could go even higher,” says Gas Buddy

Brian Lowry

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