The national average price of US gasoline rose above $5 a gallon for the first time on Saturday, according to AAA data, detailing a rise in fuel costs that is a central feature of rising inflation overall.
The national average price of regular unleaded gas rose to $5.04 a gallon on June 11, up from $4.986 a day earlier, AAA data shows.
Petrol prices have been a headache for President Joe Biden and congressional Democrats as they struggle to maintain their thin control over Congress with midterm elections due in November.
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Biden has pulled a number of levers to try to slash prices, including a record release of barrels from US strategic reserves, relaxations on summer gasoline production rules and leaning on major OPEC countries to boost production.
Yet demand around the world is rising due to a combination of booming fuel prices, sanctions on oil producer Russia following the invasion of Ukraine, and a squeeze on refining capacity.
However, US road travel remains relatively strong, a few percentage points below pre-pandemic levels, even as prices have risen.
Still, economists expect demand to begin to decline if prices remain above $5 a barrel for a sustained period.
“The $5 level is where we could see a huge amount of gasoline demand being destroyed,” said Kepler senior economist Reid L’Anson.
Adjusting for inflation, the US gasoline average is still down about 8 percent from its June 2008 high of $5.41 per gallon, according to data from the US Department of Energy.
Consumer spending has remained resilient so far, even with inflation hitting its highest level in more than four decades, with household balance sheets bucking pandemic relief programs and a tight job market, which has particularly Strong wage benefits have been promoted for low-income workers.
According to the US Energy Information Administration, a proxy for demand, supply of the gasoline product stood at 9.2 million barrels per day last week, roughly in line with the five-year seasonal average.
Higher prices for drivers come after bumper profits from major oil and gas companies. Shell reported a record quarter in May, and Chevron Corp. and BP have posted their best numbers in a decade.
US independent shale operators reported strong figures, along with other large companies including Exxon Mobil and TotalEnergy, which have promoted share repurchases and dividend investments.
Several companies have said they would rather avoid excessive investment because of investors’ willingness to boost production, which has been in place for months, rather than reacting to prices above $100 a barrel.
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