US fuel prices reach new highs ahead of Memorial Day

US retail gasoline prices have climbed to fresh all-time highs just in time for the traditional start of America’s summer driving season, the Memorial Day holiday weekend.

Prices at the pump for regular-grade gasoline rose to $4.60 per gallon on Thursday and held around that level on Friday, according to data from the AAA motor club. The benchmark US fuel price has surged by 51% in the past year and more than 90% since President Joe Biden took office in January 2021.

Motorists are feeling the price pinch even more acutely in certain high-cost states. In California, for instance, gasoline set a new all-time high at nearly $6.08 per gallon on Friday. Hawaii and Washington also set new state records, averaging $5.43 per gallon and $5.22 per gallon, respectively.

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Diesel prices are even steeper, averaging $5.53 per gallon nationwide on Friday, less than a nickel below the all-time high of $5.57 set last week. Surging diesel costs will ripple through the US economy, economists have warned, because the fuel is used for the trucks and trains that deliver most consumer goods and for the farm equipment that produces America’s food.

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“People should be very concerned,” veteran energy economist Philip Verleger Jr. told the Los Angeles Times. He predicted earlier this month that diesel prices may reach $10 per gallon by the end of this summer, rising to “unimaginably high levels absent a significant economic slowdown.”

Biden has largely blamed Russia’s military offensive in Ukraine for driving up fuel prices, while Republican critics have pointed to his administration’s actions, including blocking a major pipeline project, delaying drilling permits and suspending leasing of exploration prospects on federal lands. In March, Biden banned US imports of Russian oil to punish Moscow over the Ukraine conflict.

Fuel demand normally spikes during the summer months as Americans take more vacations while children are out of school, typically starting with the Memorial Day weekend. AAA has estimated that nearly 35 million Americans will hit the road for trips this weekend, and more than 3 million will travel by air.

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However, US fuel demand has been sluggish in recent weeks as consumers cut back on driving with inflation at a 40-year high. Gasoline demand on Thursday, a key fill-up day before the holiday weekend, rose just 4.3% from a week earlier, according to data from GasBuddy. Patrick De Haan, head of petroleum analysis at GasBuddy, called the gain “pretty lackluster” and an indication that “demand destruction is hitting the Memorial Day weekend.” De Haan had predicted a seasonal increase of 7-10%.

 

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