Gasoline prices in the US broke new records this weekend, but despite the sharp rise in prices, millions of American motorists took to the roads in celebration of the unofficial start of summer.
Even though the average cost of a gallon of gasoline topped $4.60 for the first time, about 35 million people were expected to hit the roads over Memorial Day weekend, which traditionally marks the start of America’s summer driving season, according to AAA. motor group.
That’s up 5% from last year as vacationers indulge in post-pandemic freedom.
“I think all systems will be up and running this weekend,” said Tom Kloza, head of global energy analysis at the Oil Price Information Service. “There is this attitude among the public: “I deserve it.”
But despite the hype at the start of the summer, high prices are starting to take their toll on motorists. While drivers may be ready to splurge on vacation, they have cut back on day-to-day expenses for commuting and social travel.
“We’re starting to see the return of the term kill on demand,” Kloza said.
Gasoline prices have risen rapidly over the past two years as the reopening of the US economy has pushed demand to outstrip supply. Russia’s invasion of Ukraine in February shocked the oil markets and accelerated the rise in fuel prices.
With a national average of $4.61 a gallon on Saturday, prices are more than 50 percent higher than a year ago. In California, they topped $6 a gallon. Diesel is even more expensive.
It has forced American gas-guzzling drivers to rethink how they use their car. The average American household burns 90 gallons of gasoline a month—much more than in any other major country—that’s $414 at current prices.
Gasoline demand in the four weeks to May 20 was 8.8 million barrels per day, according to the latest figures provided by the Energy Information Administration. This was a 3% decline from the previous week and almost 700,000 barrels below the same period a year ago.
“It definitely seems like high prices are causing what I would call low demand destruction,” said Patrick DeHaan, head of oil analysis at GasBuddy pricing app. He suggested that holiday weekend demand could be 7-13% lower than in 2019.
Rising fuel prices have led to runaway economy-wide inflation, a major problem for President Joe Biden, who has been blamed by many voters for high prices despite limited ability to influence them.
In the run-up to the midterm elections, the Biden administration has taken steps to lower prices, including freeing up unprecedented volumes of oil from strategic reserves, lifting restrictions on ethanol blends, and calling on U.S. oil companies and foreign producers to open taps.
Other options have been proposed, including cutting the 18.3-cent federal tax on gasoline or eliminating summer pollution rules.
Bloomberg reported last week that the administration was in talks…