Gasoline prices hit $5 a gallon nationwide for the first time

The average price for a gallon of regular unleaded gasoline in the US hit $5 as of Friday night, and fuel cost increases are expected to continue during the busy summer driving season.

The record high comes as US consumer inflation hit its highest level in 40 years and crude oil prices remain elevated, according to OPIS, a provider of energy data and analytics.

Gas prices have skyrocketed following Russia’s invasion of Ukraine earlier this year as traders, shippers and financiers shun Russian oil shipments. Oil inventories, already tight due to higher demand from economic reopening, have contracted even more with no sign of relief in sight.

Rising oil prices have helped push the national median price of gasoline to $5 a gallon for the first time, and this is fueling inflationary pressures across the US economy. Photo illustration: Todd Johnson

That has caused pain at the pump and further squeezed Americans’ household budgets, which have already been hit by higher prices for everything from grocery store items to restaurant meals and air travel. Energy prices rose 34.6% year-on-year, while the cost of groceries rose 11.9% year-on-year, adding to consumer concerns.

Shenetha James, a mother of four in Jackson, Mississippi, hasn’t seen her eldest daughter, who lives about 700 miles away in North Carolina, since Christmas because of high gas prices.

The average cost of a gallon of unleaded gasoline in Mississippi was still below the national average on Friday, at about $4.52, according to OPIS, which is owned by Dow Jones & Co., publishers of The Wall Street Journal.

“It was pretty tough,” Ms James said, “not being able to actually be there.”

Shenetha James of Jackson, Miss., hasn’t seen her eldest daughter, who lives about 700 miles away, since Christmas because of high gas prices.


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Shenetha James

Ms. James, who works for the Mississippi Department of Child Protection Services, drives one child to basketball practice and another to work at Chick-fil-A a few times a week. After dropping them off, Mrs James waits in a parking lot instead of driving home to save gas.

“We have to manage this gas to get from one payment period to the next,” she said.

Analysts say high gas prices could continue. A report by JPMorgan last month said retail gas prices could rise to $6.20 a gallon by August. Average gas costs have already exceeded that price in California, where gas averaged about $6.43 on Friday, according to OPIS.

“People are still filling up despite these high prices,” said Andrew Gross, a spokesman for AAA. “Eventually drivers may change their daily driving habits or lifestyle because of these high prices, but we’re not there yet.”

AAA, an automotive organization, receives data from OPIS.

Some drivers buy fewer gallons each time they visit the gas station, but make more frequent trips to refuel. Patrick De Haan, head of petroleum analysis at price tracker GasBuddy, said consumer resilience has remained relatively strong even as demand has started to falter. He anticipates that people will adjust their driving habits more significantly when gas is between $5.40 and $5.50.

That’s about the price that, adjusted for inflation, would surpass the 2008 peak in gas prices, Mr De Haan said.

Pandemic-related stresses have increased pressure on gas prices.


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JACQUELINE DORMER/Associated Press

“We’re getting to a point where there’s likely to be a lot more demand destruction to come as consumers get a handle on higher fuel prices – something we’ve never seen on this scale,” Mr De Haan said.

Chris Stevenson, a 24-year-old from New Jersey, said he’ll just ignore the awards for as long as possible.

“I don’t care about the gas. I travel a lot,” he said while filling up at a Manhattan gas station on Friday afternoon. The average price of gasoline in New York City was $5.18 per gallon, according to OPIS. “It’s summer, so you know we need to be outside,” he added.

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Pandemic-related stresses have increased pressure on prices. Refineries around the world shut some plants after Covid-19-related lockdowns and travel restrictions weighed on fuel demand. Now that demand is getting closer to pre-pandemic levels, the lack of online refineries is angering the market and contributing to high gas prices.

President Biden was under pressure to address rising gasoline prices. He could meet with leaders in the Middle East later this month. The potential trip comes as the Organization of the Petroleum Exporting Countries and 10 non-OPEC producers agreed to a larger-than-expected increase in oil production last week.

Under the deal, oil-producing nations will increase production by 648,000 barrels per day in July and August.

Where in American household budgets is inflation hitting hardest? The WSJ’s Jon Hilsenrath traces the roots of rising prices to learn why some sectors have risen so much more than others. Photo illustration: Laura Kammermann/WSJ

The Biden administration has also tapped oil supplies from the US Strategic Petroleum Reserve, releasing a million barrels of oil a day. The US Environmental Protection Agency issued an emergency waiver in April that allows gas stations to sell high-ethanol gasoline this summer despite environmental concerns.

Scott Solis, a 51-year-old resident of Goodyear, Arizona, who lives on a steady income, said he has restricted his trips to grocery and retail stores because of high gas prices.

He added that he used to take sightseeing trips to Sedona and Flagstaff with his wife and friends. The average cost of a gallon of gasoline in Arizona was $5.31 on Friday.

‘There’s no way we can do that now,’ said Mr Solis.

Ginger Adams Otis contributed to this article.

Write to Omar Abdel-Baqui at omar.abdel-baqui@wsj.com and Hardika Singh at hardika.singh@wsj.com

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