Gasoline prices in the U.S. continued to hit new highs this week, with the average price for a gallon of gas across all 50 states hitting $4 for the first time in history. The American Automotive Association said three states remained below the $4 per gallon on Monday, but all of them hit the threshold on Tuesday.
Georgia, Kansas, and Oklahoma remained the only states below the threshold earlier in the week. However, prices in those states have since surged past the threshold. Kansas is currently the state with the lowest average gas prices at $4.006 per gallon. Meanwhile, California logged in the highest average price at $6.021 per gallon.
The surge in gas prices is adding to the highest inflation in four decades and putting a strain on consumers' budgets. Consumers are cutting back on other consumer products and services because they are spending more on petrol.
According to AAA, several factors have contributed to the recent increase in petrol prices apart from the conflict in Ukraine and the ongoing supply chain disruptions. The first factor is due to the continued unpredictable fluctuations in crude oil prices. High pump costs are expected to remain until crude falls below $105 per barrel. The benchmark Brent crude oil price is currently about $109 per barrel.
The U.S. benchmark, West Texas Intermediate Crude, was trading at $113.90 a barrel on Tuesday, down slightly from the year's high of $129.44 on March 7. On Tuesday, even oil-rich Texas, which normally has cheap gas prices due to low taxes and proximity to refineries, had an average price of $4.214 per gallon, just slightly lower than the national average of $4.523 per gallon.
The second factor is that gas stations are converting to summer mixes of gasoline, which according to AAA, can increase prices by up to ten cents per gallon. The transition to the blend happens once a year and has nothing to do with the Biden Administration's proposal to sell E15 gasoline all summer. From June 1 to September 15, that 15% ethanol combination is normally prohibited for purchase.
The Biden administration has blamed the rise in gas prices on Russia's war in Ukraine and has taken actions to boost domestic supply, such as releasing one million barrels of oil per day from the strategic reserve for the next six months and authorizing the sale of E15 gasoline. Last week, Biden's Department of the Interior canceled an oil and gas lease sale in Alaska for nearly 1 million acres, citing a lack of business interest.
