By Nathalie Voit
Prices at the pump hit a new all-time high this week, transportation analytics firm AAA reported.
The national average for a regular gallon of gasoline is $4.40 as of May 11. The figure broke the previous record of $4.11 set in July of 2008. However, the numbers are unadjusted for inflation, meaning that the real cost of gasoline during the Great Recession ($5.37 in today’s dollars) is still well above the current national average.
At a statewide average of $5.85 a gallon, gas prices in California are the highest in the country, with some counties in the state reaching $6. On the other hand, the state of Georgia is home to the lowest gas prices nationwide. The cost of a regular gallon of gasoline in the Peach state is $3.93. Georgia is one of only a handful of places left in the country where the average pump price is just shy of $4.00.
Compared to one month ago, gas prices are nearly 30 cents higher. In contrast, the national average gas price one year ago was a cool $2.99, according to data from AAA.
Diesel prices also reached a new high on Wednesday, with the cost for a gallon of diesel surging to $5.55 on May 11.
The high cost of crude oil has driven surging gas prices. As of Wednesday near close-of-day, West Texas Intermediate crude futures, the North American oil benchmark, is trading at $105.24 a barrel. Prices recently hovered around $130 a barrel in March.
“With the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline,” AAA spokesperson Andrew Gross said in a blog post. “These prices are creeping closer to those record-high levels of early March.”
However, oil costs are not the only factor behind the recent price surge.
The industry is also grappling with a shortage of petroleum refineries that transform crude oil into gasoline and other products like jet fuel.
“Why can oil move down but wholesale gas prices move up? Because they’re different. They may be similar, but refining is the kink in the hose, and we’re down 1 [million barrels per day] refining capacity vs early 2019,” head of petroleum analysis for GasBuddy Patrick DeHaan said on Twitter.
In addition to dampened refining capacity, domestic gasoline inventories fell by 3.607 million barrels in the week ending May 6, the U.S. Energy Information Administration said in its weekly Petroleum Status Report.
So long as oil prices remain above $105 a barrel, AAA warns pump prices are likely to face upward momentum.
According to CNBC, Andy Lipow, president of Lipow Oil Associates, expects prices to rise another 15 to 20 cents over the next two weeks before settling at $4.50 a gallon.