New research shows that the average American household’s spending on gasoline has jumped to $5,000 a year over the past 12 months, from $2,800 at this time last year. There does not seem to be any sign of relief in sight. The figures, as cited by CNBC, are reported by Yardeni Research, adding that since March of this year alone, annual spending on gasoline by households has risen by more than $1,000 — in March the figure was $3,800.
Meanwhile, prices are still going up, breaking records after records. Earlier this week, the national average hit a whole new level absolutely high $4,567 per gallon. That’s up from $3,043 a gallon a year ago, according to AAA data. In California, the average price of gasoline was $6.05, up from $4,135 a year ago.
“No wonder the Consumer Confidence Index is so low. The wonder is that retail sales were surprisingly strong during April and May,” Yardeni Research said in a note.
In fact, retail sales surprised growth Over the past two months, he has somewhat eased fears of an impending recession. However, consumer sentiment did not align with sales.
Early estimates released by the University of Michigan Monthly last week showed that US consumers are now more pessimistic than they were in April when the index rebounded from another decline.
The April reading was 59.1, down from 65.2 in April and well below expectations of economists polled by the Wall Street Journal, MarketWatch. mentioned last Friday. It is worth noting that the April reading broke a three-month streak of declining consumer confidence.
we economic inflationIn the meantime, it is still at a four-decade high, driven in part by rising and spiraling energy costs. West Texas Intermediate has reached parity With Brent for the first time in years, both are trading at just over $110 a barrel at the time of writing.
Crude oil stocks are still around 14 percent Below the five-year average, distillate stocks remain tight, driving up diesel and jet fuel prices at a time of rising demand for trucked goods as well as demand for air travel.
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Diesel fundamentals are particularly worrying as supply is still catching up to demand, and some are too expected Diesel shortages in parts of the United States this summer.
Such a situation may indicate lower fuel sales as consumers reject higher energy prices. In fact, gasoline sales fell last month as spending on fuel jumped as much as 37 percent year on year, CNBC noted in its report, citing data from the Commerce Department.
Relief does not appear to be in sight. Crude oil production is rising, but this will not be enough to bring prices down at the pump. Legislation aimed at effectively banning what its sponsors consider excessive retail fuel prices make its way through Congress. However, the basics are more complex than just domestic production and a legislative bill.
This law, by the way, is not at all certain to be passed. She is already facing opposition in Congress, including from fellow Democrats to her sponsors. One of those opponents, Representative Vicente Gonzalez of Texas, told the media he had not yet seen evidence of price gouging, The Hill mentioned. Other lawmakers aren’t sure what benefits such a bill could actually reap — or whether it would have any at all.
The situation of global oil supply and demand is such that every analyst expects prices to remain high for the foreseeable future, even though the International Energy Agency has predicted that the world will overcome the estimated loss of 3 million barrels per day of Russian oil later this year. Thanks to lower demand, driven by lockdowns, China and higher prices.
By Charles Kennedy for Oilprice.com
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