U.S. gasoline prices top $5 a gallon for the first time, and are likely to keep rising!

The U.S. national average for unleaded gasoline topped $5 a gallon for the first time, as demand increased as the economy reopened from the pandemic and oil supplies dried up in part from the war in Ukraine. Analysts say U.S. natural gas prices appear set to keep rising into the summer.



The national average gasoline price hit $5.004 a gallon on Saturday, according to the AAA. That price was up from about $3.07 a year ago and was a record unadjusted for inflation. By the end of the week, the average price in about 20 states had reached $5 or more, with the West Coast having the highest prices.

"By my calculations, the average household is spending about $160 more per month on gas than it was a year ago," said Mark Zandi, chief economist at Moody's Analytics.

Gasoline prices, which typically peak in mid-May, have continued to rise this year, averaging about 65 cents higher than a month ago. Because of this year's supply shortage, analysts expect oil prices may not peak until mid-July, which is usually the peak summer driving season.

Patrick DeHaan, director of petroleum analysis at GasBuddy, said: "I don't think we're that far from the top. I don't think U.S. gasoline prices are going to go above $5.50 a gallon. I'd say $5.25 is already the top, but the market is out of control. ."

Gasoline prices could soar if there are severe refinery shutdowns this summer, or supply disruptions caused by hurricanes, he added.

Gasoline supplies are more in short supply than normal, as U.S. refining capacity has fallen by about 1 million barrels a day since before the outbreak. Meanwhile, sanctions on Russian energy have led to a sharp rise in oil prices, straining global oil and fuel supplies.

Analysts say that while consumers are bearing higher gasoline prices, gasoline prices are no longer as large a share of household spending as they used to be. Part of the reason is more efficient transportation.

According to a CNBC analysis, drivers were spending an estimated 20 cents per mile on gas, on average, as of June, despite the sharp increase in gas prices. In 1980, the same mile cost 30 cents in today's dollars.



U.S. unleaded gasoline continuous contract daily chart