Gas prices level off a bit but seem doomed to keep rising

A motorist fuels up Friday in Sacramento, ahead of the holiday travel weekend. (AP) 

The average price of a gallon of gasoline nationwide hit a plateau in recent days, climbing a negligible three cents a gallon to $4.62. But it may just be taking a breather before continuing a march toward $5.

AAA reports that there was a recent slight dip in demand that held prices somewhat in check. That said, 35 million vehicles took a Memorial Day weekend road trip (the most since 2019). And the rest of the summer travel season looms and our collective pent-up post-pandemic appetite for travel remains, so the leveling off we’re seeing in this AAA chart will likely be all too brief:

$4.62, mind you, is 45 cents higher than the average price a month ago, and $1.58 more than on this date last year.

Also, this is an average, and it’s a price that a lot of drivers probably wish they were actually seeing on the ground. If you’re in California, you’re paying an average of $6.16. The other priciest markets are Hawaii ($5.43), Nevada ($5.30), Washington ($5.23), Oregon ($5.21), Alaska ($5.21), Illinois ($5.00), Arizona ($4.95), New York ($4.92) and Washington, D.C. ($4.84).

And these prices are only if you are lucky enough to have a vehicle that burns regular gasoline. A lot of today’s turbocharged cars require a richer diet. Mid-grade gasoline is averaging $5.03 a gallon, and premium is $5.325. That’s up 47 cents in the past month, and $1.67 higher than a year ago. If your gas gauge is on empty, $5.325 means you’re approaching $100 for a fill-up.

And the average price for diesel is $5.538, which certainly helps drive up the delivery costs of goods and the inflation rate in general. But that’s actually down four cents from the all-time high of $5.577 recorded in mid-May.

Aside from summer road-tripping, factors in the global market are bound to keep prices high. Crude oil has topped $115 a barrel because of the EU’s sanctions, announced yesterday, banning imports of Russian oil. With that spigot turned off in protest of the war against Ukraine, global supply will likely shrink. And federal Energy Information Administration says total domestic gasoline stocks continued to decrease last week, because oil companies are shipping more domestically produced oil overseas where they can get a better price.

So if supplies will continue to shrink, what about demand? AAA thinks the price of gasoline may have started to become too dear at around $4.50, and demand could potentially slow now that we’re past the holiday weekend: 

“So far, the pent-up urge to travel caused by the pandemic outweighs high pump prices for many consumers,” said AAA spokesman Andrew Gross. “But 67% of drivers recently surveyed told us they would change their driving habits if gas hit $4.50 a gallon. That number rises to 75% at $5 a gallon. If pump prices keep rising, will people alter their summer travel plans? That remains to be seen.” 

At what price point might you consider changing your travel plans? Or is summer vacation too important, regardless of price? Let us know in the comments below.