The cost of fueling a gas-powered vehicle continues to climb across the United States. According to AAA, the national average for one gallon of regular unleaded gasoline topped $4.86 on June 6. And unfortunately for consumers, that doesn’t seem to be near the peak, and it could be months before gas prices begin to come down.
Patrick De Haan is the head of petroleum analysis at GasBuddy. He said in a news release Monday, “After a blistering week of gas prices jumping in nearly every town, city, state and area possible, more bad news is on the horizon. It now appears not if, but when, we’ll hit that psychologically critical $5 national average. Gasoline inventories continue to decline even with demand softening due to high prices, a culmination of less refining capacity than we had prior to COVID and strong consumption, a situation that doesn’t look to improve drastically anytime soon. Nine states have average gas prices that stand beyond the $5 per gallon mark, with more set to join in the days and weeks ahead. In addition, diesel prices also stand at a record high, a second gut-punch to consumers which pushes prices of most goods higher.”
10 states have an average price above $5 per gallon, and others are toeing the line. The only state with an average price per gallon below $4.30, is Georgia.
Gas prices are closely tied with the declining oil reserves and, more directly, with the cost per barrel of crude oil. That price is hovering around $120 per barrel, and there’s a serious risk of recession if the price climbs to $150 and higher.
Drivers are still filling their tanks
Amid the skyrocketing prices at the pump, drivers continue to top up their tanks. There’s no doubt that the added costs are straining consumers’ budgets. For a Ford F-150 with a 36-gallon tank, a complete fill from empty is around $175. One year ago, the same fill-up would have been about $109. But with the affinity for driving a personal vehicle, driving habits have not yet been modified to any meaningful degree among the American fleet.
“People are still fueling up, despite these high prices,” said Andrew Gross, AAA spokesperson. “At some point, drivers may change their daily driving habits or lifestyle due to these high prices, but we are not there yet.”
What it means for the auto industry
Gas prices are usually entrenched in the mindset of vehicle shoppers. When gas prices are low, trends lean heavily toward larger SUVs and pickup trucks. When prices rise, more passenger cars and subcompacts tend to leave the lot. But for today’s auto market, where manufacturers have dropped many of the fuel-sipping models in favor of the higher profit, less efficient models, it leaves consumers with few options but to pay the price at the pump. The long-term outlook also factors in with buyers expecting fuel prices to decline.
However, the high fuel cost has a double effect this time around. Diesel prices are also at an all-time high, forcing the cost of goods and services to increase. Not only are consumers paying more to fuel their own vehicles, but the products they buy are all but guaranteed to rise simultaneously.
In the near term, dealers can expect to see a draw toward more fuel-conscious trim levels where available. If EVs are on order and arriving soon, or if they are on the radar for the near future for their franchise, there’s a good chance that vehicle shoppers will at least be more interested than previously.
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