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Gas Prices in US at highest Level in Seven Years

The average gas price in the United States hiked to $3.13, a high for the one year and up to 40% since 1st January

According to American Automobile Association (AAA), American people can expect to pay more for gas in their vehicles at least through the August end. The average gas price countrywide hiked to $3.13, a high for the one year and up to forty percent since 1st January. Additionally, the experts are expecting that the fuel costs will not drop soon.

What are the Key Factors behind the Rise in Gas Prices?

A spokesman for AAA, Jeanette McGee, to CBS MoneyWatch that they believe the fuel prices will rise another ten to twenty cents at the petrol pump between now and the August end. The major factors behind the sharp rise in gas prices are business reopening as coronavirus restrictions ease across most of the United States, rising global oil prices, and suppressed demand for travel.

As Americans all across the country hit the road for the 4th July holiday, demand for gas in the country hit a new peak since the COVID-19 erupted in 2020, according to the statistics by travel & navigation app GasBuddy. Approximately forty-four million American people expected to travel by car during the weekend of the U.S. Independence Day.

Tuesday’s state average gas price of $3.13 remains less than the $3.70 reached in 2014, and American people can expect prices to steady and decline in September, McGee. According to AAA, the ever-peak price for a gallon of regular gas was $4.11 in July of 2008. AAA also states that across the United States, Idaho observed the major increase in fuel prices over the last week, with gas prices jumping ten cents.

Many other states of the U.S. seeing sharp spikes of late: Nevada & Montana (up five cents); Wyoming, Ohio & Utah (six cents); Washington, Oregon & Colorado (seven cents); Alaska (nine cents). Mississippi has the cheapest gas price at $2.75 per gallon.  American people may choose to eat out less or pick closer destinations because of higher prices at the gas pump, but the motor club approximates gas would have to rise to a national average of $3.50 or higher to stop citizens from traveling.

Gas Price Rise in America

The regular gasoline’s average retail price per gallon is increasing as more Americans venture out.

Gas Prices in US at highest Level in Seven Years
Source: Energy Information Administration

Patrick De Haan, the head of petroleum analysis for GasBuddy, tweeted that In Los Angeles, gas prices at the pump were a single penny shy of a nine-year high of $4.33 per gallon. In a statement, De Hann said that for the moment, with imbalances in gas supply and demand continuing, motorists will pay more for gasoline, as prices are possibly headed nowhere but up until the international oil supply starts to catch up with the increase in demand.

Underlying that climb is the move of crude oil to a 6-year high as a clash between the United Arab Emirates (UAE) and Saudi Arabia (KSA) disrupted dialogs to boost oil production by the Organization of Petroleum Exporting Countries (OPEC) and its allies.

What is the comparison of Gasoline with Oil Prices?

Around half of the cost of gasoline comes from the crude oil cost. The United States Energy Information Administration (EIA) expects crude oil prices to keep rising until August.

Gas Prices in US at highest Level in Seven Years
Source: Energy Information Administration (EIA)

Energy analyst at Eurasia Group wrote in a client note on Tuesday that the failure of oil producer club the Organization of the Petroleum Exporting Countries (OPEC) and its non-affiliated ally Russia to reach a deal to surge supply which pushed spot prices for Brent crude oil into high $70s a barrel, levels not observed since 2018.

Furthermore, Benjamin Salisbury, the Height Securities analyst, wrote in a report that access to reasonable and reliable energy, including fuel, is essential to economic recovery, encouraging the Biden government to urge compromise. The stance of the White House highlights the middle road that the government needs to walk, balancing affordability.

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