In a global economy still reeling from the effects of the pandemic, another concern emerged on Tuesday, May 10. Per NPR, the average price for regular gasoline has now soared to $4.37 a gallon.
It is common for fuel prices to increase before summer in the United States. This is due to a more expensive warm-weather fuel blend combined with increased demand as this is the vacation season. Yet, this jump has nothing to do with increased driving activity but instead has a much grimmer origin.
Russia’s invasion of Ukraine has set the oil market off on a roller coaster ride. The current prices have surpassed the $4.33 a gallon spike that was seen in March, shortly after the war began. After the Russian aggression, crude oil hit over $100 a barrel, and the price has not gone down since. What has gone down is the supply of oil due to sanctions on Russia.
According to Brent crude, the worldwide benchmark for oil prices, costs were $105 a barrel on the morning of May 10. Reuters reported that since March 30, Brent crude futures have lost 7%, but gasoline futures rose 9.4%. This, combined with global refineries encountering a bottleneck at the onset of the “driving season,” is creating a perfect storm amidst a sea of threatening inflation.
Refineries simply cannot keep up with consumer demand due to scheduled maintenance and unexpected disruptions along with a global reduction in crude stockpiles which has peaked at pre-COVID levels.
According to the American Automobile Association (AAA), gasoline prices averaged just under $3 a gallon last year. Increased summer demand, global instability, and a fractured supply chain do not offer high hopes for relief from these prices. President Joe Biden is encouraging domestic oil producers to increase their production to reduce costs, but this has yielded nominal results. His requests that OPEC increases its output have also fallen on deaf ears.
A tactic that will be taking effect is America releasing 180 million barrels of oil from its emergency supply. It is a historic move by the Biden administration to offer assistance during these unprecedented times.