Gasoline prices are at record highs and likely headed higher.
The price of a gallon of regular gasoline is above $4 in all states, above $5 in several, and above $6 in California, according to AAA data.
Nationally the average price of a gallon of gasoline was $4.62 on May 31, as the summer driving season got underway.
And prices for crude oil, the main component in gasoline, continue to rise.
Earlier Gas Price ForecastIn early May the U.S. Energy Information Administration forecasted that the price per barrel of Brent crude, the effective international standard, would average $107 in the second quarter and $103 in the second half of the year.
The average price was forecast to fall below $100 in 2023.
“However, this price forecast is highly uncertain,” the EIA wrote at the time.
In particular, the agency said “we completed this outlook on May 5, therefore it does not include an EU ban on oil imports from Russia.”
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On Monday, May 31 the European Union finally set plans for a partial ban on Russian oil imports, moving to halt seaborne deliveries by the end of the year, effectively cutting imports by two-thirds.
The ban is intended to cut payments to Russia as it continues its brutal invasion of Ukraine.
Sure enough, Brent crude prices rose 1% to $122.94 a barrel in recent trading, according to Bloomberg data.
That’s well above the EIA’s forecasts for the quarter and the rest of the year.
Some Exemptions to the EU PlanThe EU plan has yet to be ratified by individual countries.
It also doesn’t cover pipeline deliveries and it carves out an exemption for Hungary, whose right-wing leadership has opposed a ban.
Still, as the EIA wrote at the time of its last forecast, at the beginning of May, “the bans being reported at the time of writing would likely contribute to tighter oil balances and higher oil prices than our current forecast.”
Time will tell whether the EIA’s next Short-Term Energy Outlook, due out on June 7, sees even steeper price rises ahead.