With the arrival of the summer driving season, the national average price of regular gasoline soared Tuesday to a nominal record $4.37 per gallon. But relief may be on the way, with oil prices falling below $100 a barrel, a roughly 10 percent drop since the weekend.
It may take a week for prices at the pump to reflect the gyrations in the price of crude oil, which fell from over $120 by the West Texas Intermediate, the US benchmark, in March. It ended Tuesday at $99.76.
That weakness reflects a slowdown in the Chinese economy due to the lockdown of several cities to combat the covid-19 pandemic, along with a growing consensus among traders that the global economy is also slowing.
“I think the consumer is going to get a bit of a break here,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. “Just be careful with July and August. I think the consumer will drive this summer, whether it’s $4 a gallon or $6 a gallon.”
Oil markets have recently been rocked by contradictory trends. Saudi Arabia lowered oil prices for its Asian customers over the weekend, which should put some downward pressure on prices around the world. But the proposed European embargo on Russian oil has raised expectations that global crude supplies will shrink and prices will rise.
Over the years, gas prices have risen as motorists hit the road during the summer. The national average price of a gallon of regular gasoline has risen 17 cents in the last week, an unusually fast rise. A year ago, the average was $2.97, according to the AAA Motor Club.
Gasoline prices vary widely across the country due to local taxes and regulations. California drivers pay an average of $5.84 for a gallon of regular gasoline, while Texans pay $4.07.
Gasoline prices, when adjusted for inflation, peaked in July 2008, when the average gallon of regular gasoline rose to nearly $5.40 in today’s dollars.
“Within the next two weeks, we should see gasoline prices spike,” said Michael Lynch, president of Strategic Energy and Economic Research, which does consulting and analysis in the oil and gas industry. “Oil prices should go down because people will realize that Russian supplies will not disappear as European sanctions are phased in. They will just move on to new customers.”
Diesel and jet fuel prices have been rising faster than gasoline, putting further inflationary pressure on agriculture, shipping and travel. Natural gas prices have also been turning. They rose more than 3 percent on Tuesday after falling more than 11 percent on Monday.