The end of a 99-day streak of declining gasoline prices, which provided customers with a glimpse of optimism that the red-hot inflation may be cooling, has resulted in prices at the pump remaining significantly higher than they were one year ago.
According to the data provided by AAA, the price of a gallon in the United States rose by a fraction of a penny on Wednesday, reaching a new average of $3.68. This is a decrease from the record-setting $5.02 average that was reached in the middle of June.
The question that has to be answered immediately is whether or not the price hike that occurred on Wednesday was merely a hiccup or whether it was a harbinger to a return of higher costs. Both drivers and President Joe Biden are interested in the answer because Biden is often credited with bringing down gas costs by freeing millions of barrels of oil from storage.
The price decrease that lasted for 14 weeks was the longest streak seen since 2015.
The price of gasoline largely mirrors movements seen in the price of crude oil on a global scale. Since the middle of June, crude oil prices on a global scale, including the U.S. benchmark and the international Brent, have been falling due to growing concerns about the possibility of a global recession, which would result in a lower demand for energy.
There is a widespread consensus among energy analysts that price increases are more likely to occur in the coming weeks than price decreases. Predictions are difficult because of the ebb and flow of public opinion over the economy, Russia's war in Ukraine, and hurricane season, which poses a persistent risk to refineries in the Gulf of Mexico.
According to Tom Kloza, who works for the Oil Price Information Service, I anticipate that we will see unstable prices for gasoline until the end of the year, with some days down and up, respectively. He forecasted that the next streak would be a run of rising prices early in the year following, which would be driven by investors, speculators, and "the concern that there won't be enough fuel to go around.
An expert with the Price Futures Group named Phil Flynn predicted that prices will increase once withdrawals from the United States Strategic Petroleum Reserve, which have been occurring at a rate of one million barrels per day for the past six months, come to an end this fall
Refiners will no longer have access to the reserve's cheap oil, as predicted by Flynn, and the market will reflect this reality. When winter arrives, there is a good chance that the price of oil will experience a major spike.
Airline companies are one industry that has been able to pass on the increased cost of gasoline to their customers. Others have not been successful in accomplishing that goal.
Mike Mitchell, a co-owner of Mitchell Milk Hauling, which transports around 10 million pounds of milk per year from farms located in northwestern Pennsylvania, explained that we haul for farmers, and we can't raise (prices) for the farmer because they are hurting too.
The seven trucks owned by the company consume approximately $20,000 worth of gasoline each month, and the reduction in gas prices that occurred this summer was just a moderate help.
Mitchell stated that the cost of anything else that was purchased would increase. "Nearly every component of the vehicle has been increased by a factor of two."
Pennsylvania waste carrier J.P. Mascaro & Sons' attorney, Al DeGennaro, said the high gas prices have been a burden and their volatility is difficult to deal with.
It raises questions about the manner in which you will place bids in the future… DeGennaro, whose firm operates a fleet of over 300 trucks, noted that many government contracts last for three to five years.
In the month of June, the national average price of gasoline went past $5 per gallon, and it surpassed $6 in the state of California. This was due to the economic recovery, which led to an increase in travel, as well as the fact that Russia's war in Ukraine prompted a jump in oil prices.
The rise in costs has made things difficult financially for families and has given the Biden administration headaches on the political front. Less than two months remain until the midterm elections for Congress, and it is unclear whether voters will praise Biden and the Democrats for the recent reduction in prices (down $1.34 a gallon from the record set on June 14) or blame them because prices are still significantly over the $3.19 average one year ago.
In addition to releasing oil from the strategic reserve, President Biden put pressure on other oil-producing countries to increase their output. He also engaged in a conflict with the executives of oil companies after accusing them of making immoral profits while Americans struggled to pay high pump prices.
An expert by the name of Flynn claimed of government officials that Every time prices go down, they are taking a victory lap, despite the fact that prices are significantly higher now than they were when they came into office.
In June, oil prices in the United States and internationally surpassed $120 a barrel, but they have decreased since then. On Wednesday, the price of West Texas Intermediate crude was around $83, while the price of Brent crude, which is used as the international benchmark, was around $90.
Unanticipated occurrences have the potential to alter the price of gasoline. After an explosion and fire on Wednesday killed two employees at a BP refinery in Toledo, Ohio, the facility was immediately shut down. The height of hurricane season has not yet arrived in the Gulf of Mexico, but there are still several weeks left. The National Oceanic and Atmospheric Administration estimates that there is a 65% chance of an increase in the number of hurricanes that occur this year.
The preceding is a summary of an article that originally appeared on Headline Wealth.
