As the summer driving season approaches, the national average price for regular gasoline climbed Tuesday to a nominal record high of $4.37 a gallon. But relief could be on the way, with oil prices falling below $100 a barrel, down about 10% since the weekend.
It may take a week for prices at the pump to reflect fluctuations in the price of crude oil, which rose from over $120 for the West Texas intermediate, the US benchmark, in March. It ended Tuesday at $99.76.
The weakness reflects a slowdown in the Chinese economy due to the lockdown of several cities battling the Covid-19 pandemic, as well as a growing consensus among traders that the global economy is also slowing.
“I think the consumer will get a little break here,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. “Just pay attention to the months of July and August. I think the consumer will be driving this summer, whether it’s $4 a gallon or $6 a gallon.
Oil markets have been rocked lately by contradictory trends. Saudi Arabia lowered oil prices for its Asian customers over the weekend, which is expected to put downward pressure on prices around the world. But the proposed European embargo on Russian oil has bolstered expectations that global crude supplies will tighten and prices will rise.
Over the years, gas prices have risen as motorists hit the road for the summer. The national average price for a gallon of regular gasoline rose 17 cents last week, an unusually fast climb. A year ago, the average was $2.97, according to the AAA automobile club.
Gasoline prices vary widely across the country due to local taxes and regulations. California drivers pay an average of $5.84 for a gallon of regular fuel while Texans pay $4.07.
Gasoline prices, when adjusted for inflation, were highest in July 2008, when the average gallon of regular gasoline reached nearly $5.40 in today’s dollars.
“Within the next two weeks, we should see the peak in gasoline prices,” said Michael Lynch, president of Strategic Energy and Economic Research, which does consulting and analysis in the oil and gas industry. “Oil prices should come down because people will realize that Russian supplies won’t disappear with the gradual introduction of European sanctions. They will just be moved to new customers.”
Diesel and jet fuel prices have risen faster than gasoline, increasing inflationary pressure on agriculture, shipping and travel. Natural gas prices also fluctuated. They rose more than 3% on Tuesday after falling more than 11% on Monday.