If you drove or flew anywhere for a Memorial Day weekend vacation you couldn’t help but notice that fuel prices, especially gasoline and diesel fuel, are hitting record highs, with benchmark Brent crude back at $120 a barrel for the first time since March.
On May 30 OilPrice.com reported the national average price of a gallon of regular gasoline was $4.619, according to data from AAA. That’s up from $4.596 per gallon a week ago, $4.178 a month ago, and up from the $3.045/gal average price at this time last year.
Gasoline prices in the United States have been setting all-time highs nearly every day in the past few weeks. For the first time, the average price for a gallon of gas exceeded $4 in all 50 states, AAA data shows. On a nominal basis, this price was the all-time high price for gasoline recorded in EIA’s weekly Gasoline and Diesel Fuel Update, which dates back to 1990 reported Tsvetana Paraskova of OilPrice.com.
The writers at investment site Seeking Alpha observed that Memorial Day typically kicks off the start of the summer driving season and peak energy demand season in the U.S. and elsewhere. However, refined product inventories are depleted, with distillate stocks near the 17-year low of 104M barrels seen on May 6, per the U.S. Energy Information Administration. Storage in the U.S. South Central region is also 14% below its prior five-year average despite "strong power burns, narrow summer-to-winter forward price spreads and record LNG demand promising to slow injections."
US benchmark West Texas Intermediate rose to more than $116 a barrel. However, relief from U.S. domestic production is fading as Carl Surran, Seeking Alpha editor, reported active drilling rigs in the U.S. fell by 1 to 727, which Reuters said snapped 30 weeks of consecutive gains, Baker Hughes reported Friday in its latest survey.
Drilling rigs targeting crude oil fell by 2 to 574, their first decline after nine straight weeks of gains, while gas rigs gained 1 to 151 and two rigs were classified as miscellaneous.
Rigs targeting crude oil in the Permian Basin fell by 1 to 341.
For anyone keeping track these highs were measured against the top prices seen the last time Joe Biden and his team of Obama administration retreads were in the White House.
High crude oil prices, the effect of the Russian invasion of Ukraine on the crude and fuel markets, and U.S. gasoline demand exceeding refinery runs are the key factors driving the record-high gasoline prices in nominal terms, the EIA noted.
OPEC+ is scheduled to meet on Thursday, but the producer group still looks set to rebuff Western calls for speeding up increases to their oil output. Markets are also on edge after the Iranian Navy seized two Greek oil tankers in retaliation over the confiscation of Iranian oil by the U.S. from a tanker held off the Greek coast.
Greece, which has more supertankers sailing under its flag than any other country, has warned Greek oil tankers and other vessels to avoid sea waters close to Iran. "This raises the specter of further disruptions to oil flows through the Strait of Hormuz, which carries a third of the world's trade," ANZ Research analysts wrote in a research note.
And, it looks increasingly unlikely that OPEC will change its strategy now that oil prices hit $100, with several of the cartel’s members claiming they don’t see the need to boost production, wrote Irina Slav of OilPrice.com.
But President Biden has continued to stand in the way of increased American oil production, with White House Press Secretary Jen Psaki saying the Biden administration is going to use this crisis to push Americans into "biofuels" and "electric cars" as an alternative option.
Lobbying the Saudis and doing deals with adversary states like Iran and Venezuela is not an answer to America’s energy needs.You can call Joe Biden at the White House at 202-456-1111 or email him through this link. Tell him thanks to his feckless foreign policy and destruction of America’s energy security America’s working families are suffering. If oil goes from $120 to $150 a barrel Americans will soon be forced to choose between food and fuel.
U.S. gas prices
Memorial Day weekend
All-time high
Joe Biden administration
U.S. energy production
climate change
Biden energy policy
world oil prices
Ukraine Russia war
OPEC
oil inventories
Strait of Hormuz