October 6, 2022

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US gasoline prices rise again amid talk of Russian oil embargo

US gasoline prices rise again amid talk of Russian oil embargo

Gasoline prices have risen more than $4 a gallon, the highest price US motorists have faced since July 2008, as calls grow to ban Russian oil imports.

Prices at the pump were going up long before Russia invaded Ukraine It has escalated faster since the start of the war. The US national average gallon of gasoline rose 45 cents a gallon last week and topped $4.06 on Monday, according to the AAA Automobile Club.

“I’m looking forward to being able to walk to work,” said Asia Joseph, who paid $4.29 a gallon at the BP station in Brooklyn, New York. “This is the first time I’ve filled my closet in 10 days.”

In Huntington Beach, California, Julianne Mesa earns $15 an hour cleaning offices. On Monday, he paid $92 to fill up his car at $5.79 a gallon.

“It’s very expensive, and high for those who earn the bottom line,” Mesa said. His family had already scaled back on eating out to cut their spending during the pandemic.

The average gallon price broke $4 on Sunday for the first time in nearly 14 years and is now nearly 50% higher than last year.

The price is higher in Europe, averaging 1.75 euros per liter last week, according to the European Commission, which equates to $7.21 per gallon.

GasBuddy, which tracks prices down to the service station level, said Monday that the US is likely to break its record price of $4.10 a gallon, but that doesn’t explain inflation. On today’s terms, the benchmark rate will be equal to about $5.24 after accounting for inflation.

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“Forget the $4 a gallon mark, the nation will soon hit new all-time highs and we can get close to the national average of $4.50,” said Patrick de Haan, analyst at GasBuddy. We’ve never been in a situation like this before, with this level of uncertainty. … Americans will feel the pain of higher prices for some time.”

Energy prices are contributing to the worst inflation Americans have seen in 40 years, which far outweighs the higher wages. Consumer prices jumped 7.5% in January, compared to a year earlier, and analysts expect a 7.9% increase when the government releases February numbers later this week.

Oil prices rose early Monday before pulling back. The price of the US benchmark crude rose to $130 a barrel overnight, then fell to around $119, up 3%, in afternoon trading. The global price jumped to $139 before falling back to around $123 a barrel. US stocks fell, with the S&P 500 down 3%, its biggest drop in 16 months.

Crude oil prices fell in early 2020 as economies around the world shut down due to COVID-19 — even futures prices turned negative, meaning some sellers were pushing buyers to buy oil. However, prices rebounded, as demand rebounded faster than producers pulled oil from the ground and stocks dried up.

However, few forecasters expected an increase to come this week. Just a month ago, the Department of Energy forecast that the oil price will average around $80 a barrel this year. That was before Russia invaded Ukraine on February 24.

The United States is the world’s largest oil producer – ahead of Saudi Arabia and Russia – but it is also the largest consumer of oil, and it cannot meet this staggering demand with domestic crude alone.

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US imported 245 million barrels of oil from Russia last year – about 8% of total US oil imports – up from 198 million barrels in 2020. That’s less than what the US gets from Canada or Mexico but more than what it imported last year from Saudi Arabia.

Russia’s violent attack on Ukraine has sparked calls for Russia to cut off the money it gets from oil and natural gas exports. Europe is highly dependent on Russian gas.

President Joe Biden has been reluctant to ban Russian oil, fearing it would drive up inflation as the November midterm elections approach.

Several Republicans and a growing number of House and Senate Democrats, including House Speaker Nancy Pelosi, a Democrat from California, have supported the Russian crude oil embargo. As a way to put more pressure on Russian President Vladimir Putin to end the bombing of Ukraine. On Monday, a bipartisan group of committee chairs reached an agreement on legislation banning Russian oil imports and suspending the status of normal trade relations with Russia and its ally Belarus – the latest move could lead to steep tariffs on other goods from the two countries.

The White House has not ruled out a ban, and Secretary of State Anthony Blinken said Sunday that the United States and its allies are discussing a ban “while making sure there is still an adequate supply of oil” on the global market.

Talk of a Russian oil embargo has prompted US officials to consider other resources that are currently limited. What was supposed to be a secret tripSenior US officials traveled to Venezuela over the weekend to discuss the opportunity to ease oil sanctions on the major crude exporter.

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Ronnie James, an Uber driver in Brooklyn, wants the government to do something to bring prices down – get oil from Venezuela or make more use of the Strategic Petroleum Reserve.

“People who are building the wealth of this nation every day can take a break,” he said.

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Associated Press writers Julie Walker in Brooklyn, New York, Chris Rogaber and Lisa Mascaro in Washington, and Amy Thaksin in Huntington Beach, California contributed to this report.