Americans should get ready for $5 a gallon gas, analyst warns

Americans can expect growing pain at the pump, as rising oil costs, along with rising demand and declining supply, continue to drive up prices at U.S. gas stations. with Ukraine intensifiesexperts say.

The current national average gas price has soared to $ 3.78 a gallon, up 20 cents just last week, according to Patrick De Haan, head of oil analysis at GasBuddy. Industry data shows that fuel costs have risen about a dollar from a year ago, once again for millions of Americans struggling with a sharp rise in inflation.

In the U.S. with the most expensive fuel in the United States, motorists are already paying nearly $ 4.50 a gallon, according to GasBuddy price tracker.

De Haan tweeted on Feb. 28 that the average price of gas in some U.S. cities will reach $ 5 a gallon "in the next two weeks."

San Francisco became the first U.S. city on Thursday with an average gas price of more than $ 5 a gallon, up more than 30 percent in one year.

"DURING: For the first time an American city has exceeded the average of $ 5 / gallon per gallon. San Francisco!" De Haan tweeted.

Feeding inflation

Oil prices rose another $ 7 a barrel on Wednesday following a deal by the United States and other major governments to release 60 million barrels of their national reserves, half of them American barrels, could not stifle supply concerns over Russia's attack on Ukraine.

Oil prices rose again on Thursday after a new round of US sanctions on Russia's oil refinery sector. The price of Brent crude, the international benchmark, rose to $ 120 a barrel, the highest level in 10 years, before falling back to $ 110.46 a barrel, Reuters reported.

The decision by the 31 member countries of the International Energy Agency to release oil from emergency reserves was intended to "send a strong message to the oil markets" that there will be "no shortage of supplies" as a result. of the invasion of Ukraine. but failed to move markets.

Oil traders were not impressed. "Markets have ruled out the idea that the 60 million barrels of strategic reserves released will result in risks of jeopardizing Russian supply," Tan Boon Heng of Mizuho Bank said in a report. "Russia is pumping more than that in just six days."

Russia is one large crude oil exporter, which accounts for about 12% of the world's supply. Any disruption in these exports is likely to raise pump prices for consumers almost everywhere, experts say.

"We believe that the war between Russia and Ukraine will intensify global and US inflationary pressures by raising oil and gas prices," Brian Coulton, chief economist at credit rating agency Fitch, said in an email. .

While the sharp rise in gas prices has led to a slowdown in consumer spending, analysts at the moment do not see the latest rise in oil prices as an immediate danger to the US economic recovery.

“While the sustained rise in energy prices poses a downward risk to the outlook, we don’t see them as enough to derail the recovery,” investment bank Barclays found in a March report.

"Fortunately, the shock to energy prices is affecting when the U.S. economic recovery is on a relatively solid footing, with many states removing restrictions on activity as vaccination rates rise and cases fall of COVID, and labor markets show remarkable resilience to Delta and Omicron Variants, "the economists wrote.

—Associated Press contributed to this report.

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