Petrol prices in the United States hit a record $US5 a gallon on the weekend, (equal to about $A1.90 a litre, which is the average price in Sydney), and won’t be dropping anytime soon.
Rising prices at the pump are a key driver in the highest inflation that Americans have seen in 40 years.
On Saturday, the nationwide average for a gallon ticked just above $US5, a record, according to auto club AAA, which has tracked prices for years. The average price jumped 18 cents in the previous week, and was $US1.92 higher than this time last year.Why is this happening?Global oil prices have been rising — unevenly, but sharply overall — since December. The price of international crude has roughly doubled in that time, with the U.S.
Tighter oil and gasoline supplies are hitting as energy consumption rises because of the economic recovery.Finally, Americans typically drive more starting around Memorial Day, adding to the demand for gasoline.Analysts say there are no quick fixes; it’s a matter of supply and demand, and supply can’t be ramped up overnight.
The US could ask Saudi Arabia, Venezuela or Iran to help pick up the slack for the expected drop in Russian oil production, but each of those options carries its own moral and political calculations.Republicans have called on President Joe Biden to help increase domestic oil production — for example, by allowing drilling on more federal lands and offshore, or reversing his decision to revoke a permit for a pipeline that could carry Canadian oil to Gulf Coast refineries.
Some refineries that produce gasoline, jet fuel, diesel and other petroleum products shut down during the first year of the pandemic, when demand collapsed. While a few are expected to boost capacity in the next year or so, others are reluctant to invest in new facilities because the transition to electric vehicles will reduce demand for gasoline over the long run.
It could be up to motorists themselves — by driving less, they would reduce demand and put downward pressure on prices.
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