Gasoline prices in the United States hit new highs on Monday due to tight oil supplies, which has led to a rise in refined product prices. The national average for gasoline reached $3.88, with prices in Western states above the national average, especially in California where the average price per gallon was $5.69. Additionally, the cost of diesel, commonly used for transportation via trucks, increased 23 cents in the last month, reaching $4.57 per gallon.
This increase in fuel costs has affected several industries, including airlines such as United, Delta and American, who have seen a decrease in profits due to higher fuel expenses. This rise in energy prices has raised concerns about its potential negative impact on the broader economy, especially as the Federal Reserve works to control inflation. Although interest rates are expected to remain stable at the next meeting, the possibility of another rate increase later this year has not been ruled out.
It is important to note that the increase in gasoline prices is not under the exclusive control of the Federal Reserve. According to Claudia Sahm, a former economist at the Federal Reserve Board, geopolitical events are driving up energy prices. She highlighted that the Federal Reserve does not have complete control over inflation.
Crude oil prices have been rising steadily over the past three months, with West Texas Intermediate (WTI) rising about $23 per barrel since late June, topping $91 on Monday. Similarly, Brent crude futures have seen a rise of more than 30% over the same period, topping $94 per barrel on Monday.
To maintain higher oil prices, OPEC+ member Saudi Arabia is implementing production cuts to finance domestic initiatives. These cuts are expected to keep crude oil prices above $90 per barrel. Russia has also reduced its exports by 300,000 barrels per day until the end of the year. These measures are in addition to the reductions announced by OPEC+ in the fourth quarter of 2022.
The rise in gasoline prices reflects a complex combination of factors, including geopolitical events, oil supply shortages and production cuts. It presents challenges for several industries and raises concerns about its impact on inflation and the broader economy.
Sources:
– Yahoo Finance (interview with Claudia Sahm)
– Yahoo Finance (interview with Andy Lipow)
– Yahoo Finance (Ines Ferre profile)
