The average price of a gallon of regular gas is over $4 in every state today, according to AAA. Kansas has America’s least expensive fuel, at $4.02.
The nationwide average sits at a record $4.57. Though we should note prices in the summer of 2008 were higher when adjusted for inflation.
Exactly one month ago, we were celebrating the news that gas had slipped under $4 per gallon in more than half the country.
JP Morgan Warns of $6 per Gallon
California has the nation’s most expensive fuel, at $6.05 today. But some analysts are beginning to warn that $6 per gallon of fuel could spread nationwide this summer.
“There is a real risk the price could reach $6+ a gallon by August,” Natasha Kaneva, JP Morgan’s global head of oil and commodities research, told CNN on Tuesday.
America’s gasoline inventory is at its lowest point since 2019. But domestic production is unlikely to increase in the near future.
Worldwide spikes in diesel prices have some American refineries busy making diesel to sell in Europe and South America.
Even if they switched their attention to making fuel for the domestic market, their capacity is limited. And oil companies are reluctant to drill more while they’re taking in record profits. Even amid record prices, the federal government canceled an auction for new drilling rights last week due to a lack of interest.
Severin Borenstein, an economics professor at the University of California at Berkeley, told the Washington Post, “With high crude oil prices, constrained refineries, and strong demand as the economy comes back, it’s no surprise that we have hit these levels.”
Other Analysts Doubt Morgan’s Warning
Other analysts, though, question JP Morgan’s projection.
Andy Lipow, president of Lipow Oil Associates, told CNN that $6 might be far-fetched. “Before we get there, we would have significant demand destruction, not only here, but around the world,” he said.
Patrick De Haan, head of petroleum analysis at GasBuddy, agreed. “I personally think we’d see a recession before we’d see a national average of $6,” he explains.
Demand destruction may be beginning. The U.S. Energy Information Administration reports that Americans burned 8.702 million barrels of gasoline in the week ending May 6 (the most recent for which data are available). That’s a decrease of almost 2% from the week before, at a time of year when consumption usually rises.