According to AAA, the average price of a gallon now amounts to $5 for the first time ever. This shouldn’t come as a shock, as gas prices have been steadily increasing for the past eight weeks.
When the current price hikes began on April 15, the national average was $4.07, but it soon reached $4.87 per gallon in June. According to the most recent reading from OPIS (Oil Price Information Service), the price of gas went up by 23% in less than two months.
Furthermore, according to AAA’s newest data, 32% of gasoline stations in the US charge more than $5 per gallon. What’s more, around 10% of gas stations charge over $5.75.
Expectedly, California is still the state with the highest gas prices. The average price per gallon in the Sunny State amounts to $6.43.
And the prices will likely continue to go up. According to Tom Kloza, the head of energy analysis for the OPIS, the average price of gasoline in the US could reach $6 later this summer.
But what’s the reason behind the soaring prices?
The answer is high demand coupled with supply problems.
Oil and gasoline are scarce on the market, which is causing the cost of both to rise. Russia, one of the biggest oil exporters in the world, withdrawing from the market is also part of the problem. And so are the sanctions levied against it by the US and Europe.
And lastly, there’s the problem of limiting supply. Namely, OPEC and its partners have reduced oil production as the oil demand plunged in the early days of the pandemic, leading to many businesses closing down.
