Joe Did That: Economists Warn That Labor Day Gas Prices Will Be Here, Making Driving Unaffordable For Most

By Darren Nagel | Sunday, 22 May 2022 15:45
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In August, drivers across the nation could spend more than $6 per gallon of gas to fill up their vehicles.

Following unresolved issues with the fuel supply chain and an expected increase in summer traveling, JPMorgan Chase analysts predict another hike in gas prices this summer.

“There is a real risk the price could reach $6+ a gallon by August,” said Natasha Kaneva, head of global oil and commodities research at JPMorgan Chase. “U.S. retail prices could surge another 37% by August.”

With each additional $1 increase in gas prices, JPMorgan Chase estimates that Americans’ consumer habits will decline by 60 cents.

“The hit from higher gas prices is twofold for high-gas-consuming states. Not only do higher prices reduce real income by more than elsewhere, but such states also appear to be less able to offset higher prices by reducing real demand,” said Peter McCrory, U.S. economist at J.P. Morgan Research.

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As of Thursday morning, the average price of a gallon of regular gas had reached $4.59, while a gallon of premium gas had reached $5.20 — more than a $1.50 increase from last year.

Sen. Ted Cruz (R-TX) condemned President Joe Biden, saying he cut off resources and implemented policies that have created high gas prices. “Record gas prices are the intended effects of [Biden’s] deliberate actions,” Cruz tweeted.

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On Wednesday, drivers nationwide saw the highest gas prices the country has ever recorded, surpassing $4 per gallon in all 50 states and Washington, D.C., for the first time.

Oil prices, already increased by a rebounding economy after a pandemic-induced slowdown, were pushed even higher when Russia’s invasion of Ukraine pulled some three million barrels of Russian oil a day from global supplies.

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“Putin’s invasion of Ukraine has driven up gas prices and food prices all over the world,” President Biden said in an April 1 address.

Prices have stabilized somewhat recently, though oil remains near $100 a barrel, a level that is likely to worsen inflation and curb consumer spending. Mr. Biden, hoping to tamp down petroleum prices, plans to tap up to 180 million barrels of strategic oil reserves, an unprecedented move the administration hopes will provide temporary relief as U.S. producers move to increase domestic supplies. Other Western nations and allies have also agreed to release oil from their reserves.

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Gasoline prices have hit records as petroleum refiners that had cut back output as the economy stalled still haven’t reverted to pre-pandemic levels. The market has been in a deficit of about one million barrels of daily petroleum-refining capacity since early 2020 when the U.S. produced about 19 million barrels of refined petroleum a day.

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