By Laura Sanicola
June 11 (Reuters) – U.S. gasoline topped $5 a gallon for the first time on Saturday, according to AAA data, prolonging rising fuel costs that drive inflation.
The national average price of regular, unleaded gasoline rose to $5,004 a gallon on June 11, from $4,986 the day before, according to AAA data.
High gasoline prices are a headache for President Joe Biden and Democrats, who will fight to maintain their reduced control of Congress in November’s midterm elections.
Biden has used several levers to try to lower prices, including releasing record barrels from US strategic reserves, waiving summer gasoline production rules, and backing key OPEC nations to increase production.
However, fuel prices have soared worldwide due to a combination of rebounding demand, sanctions against major producer Russia after its invasion of Ukraine and a drop in refining capacity.
However, road travel in the United States remained relatively robust, down just two percentage points from pre-pandemic levels, even as prices rose.
However, economists expect demand to start falling if prices remain above $5 a barrel for an extended period.
“The $5 level is where we could see a strong demand destruction for gasoline,” said Reed Lanson, chief economist at Kepler.
In line with inflation, average US gasoline prices remain about 8% below the June 2008 high of about $5.41 a gallon, according to figures from the US Department of Energy.
Consumer spending has so far remained resilient even as inflation has risen to its highest levels in more than four decades, with household balance sheets backed by pandemic relief programs and a tight labor market fueling strong wage increases, especially for low-income workers.
The higher prices for drivers come at a time when major oil and gas companies are posting record profits. Shell (LON:) posted a record quarter in May and chevron Corp (NYSE:) and BP (LON 🙂 recorded its best numbers in a decade.
Other major companies, such as ExxonMobil (NYSE: 🙂 and TotalEnergies, as well as independent US shale operators, posted strong numbers that spurred share buybacks and dividend spending.
(Reporting by Laura Sanicola and Shivani Tana; Spanish editing by Carlos Serrano)
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