The soaring prices show no sign of abating in the immediate future, as global forces continue to prevent disrupted supply from keeping up with strong demand from countries that are rebounding quickly from the pandemic. Western sanctions against Russia over its invasion of Ukraine have wreaked havoc with global energy markets, but the most dramatic measure — the European Union’s ban on Russian oil imports — will not even go into effect until the end of this year. Gas prices could also be further pushed up by drivers hitting the road for summer vacations, and the lifting of covid restrictions in some Chinese cities is expected to lead to rebounding fuel demand there, putting further upward pressure on prices internationally.
Energy costs rose by 3.9 percent from April to May, while energy prices overall have spiked by 35 percent since last year, according to a Bureau of Labor Statistics report released Friday. Inflation overall reached 8.6 percent in May, the government reported Friday, the highest rate in 40 years.
The unrelenting upward march of gas prices has emerged as one of the chief domestic political threats to the Biden administration ahead of this fall’s midterm elections, and the White House has few obvious solutions to reverse the trend despite an intensive push by top aides and the president himself. The White House is now caught between liberals allies in Congress who are pushing for escalating a populist attack on oil and gas firms, and the views of some of their trusted economic experts who believe those efforts could prove counterproductive.
A poll released Thursday by The Washington Post and George Mason University’s Schar School found that Americans were broadly concerned both with inflation generally and rising gas prices in particular. About 44 percent of drivers said they have only partially filled their car’s gas tank as a result of higher prices, with 61 percent of those earning under $50,000 a year doing so. Roughly two-thirds of drivers reported making fewer trips to the grocery store because of rising gas prices.
“This is a huge economic and political albatross around the neck of the administration, and the difficulty is there really isn’t an easy way to tackle this using the policy tools available to them,” said Eswar Prasad, an economist at Cornell University.
Americans are not accustomed to seeing energy prices as high as they have been over the last several months. The average price for a gallon of gas in the U.S. hit $5.004 on Saturday, according to AAA. Already, at least 19 states have average gas prices of $5 or more, with California above $6 a gallon. Some analysts think America could near a nationwide average of $6 a gallon by the end of the summer. Diesel prices, particularly important to the trucking and construction industries, have jumped nationally from $3.21 last year to $5.74 on Friday, a record, according to GasBuddy, which tracks fuel prices.
These higher energy prices seep into almost every major part of the economy. They drive up the costs for electricity, transportation, shipping,…
Read More: $5 gas: Rising fuel costs are squeezing the U.S. economy and the White House
