Gasoline topped an average of $5 per gallon in the US for the first time, signaling the latest pain point for American consumers and President Joe Biden’s efforts to curb inflation.

Demand has jumped to the highest level this year, just over a week into the peak US driving season. Pump prices rose to $5.004 a gallon early Saturday in a rally that began in mid-April, according to auto club AAA. In California, the most expensive state to fill up, prices are as high as $6.43 a gallon.

Record US prices at the pump have been a main cause of inflation that’s running at the highest levels in 40 years. Biden accused Exxon Mobil Corp. and other oil companies of exploiting high gasoline prices after Labor Department data on Friday showed that consumer prices unexpectedly accelerated, rising 8.6% in the year to May.

Surging energy costs -- caused by underinvestment in new drilling, Covid-19 shutdowns and sanctions linked to Russia’s war in Ukraine -- have become a top political challenge for Biden as he heads into midterm elections in November.

“We’re going to make sure everyone knows Exxon’s profits. Exxon made more money than God last year,” he said during an event at the Port of Los Angeles.

Fuel costs have risen as global demand for refined products exceeds the world’s shrinking capacity to make them. 

Despite the elevated costs, Americans still hit the road over the Memorial Day weekend, consuming 9.2 million barrels a day of gasoline. That pushed the best available gauge for short-term demand to its highest level since December, according to the Energy Information Administration.

Gasoline demand remains some 1% lower than at the same time last year and almost 6% lower than during the same period in 2019.

Source:
courtesy of BLOOMBERG

by Chunzi Xu

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