(May 6): US gasoline prices topped US$4.50 ($5.72) a gallon for the first time since July 2022, extending their march higher as drivers face further strain from the prolonged conflict in the Middle East.
The nationwide average retail price for regular unleaded gasoline rose to US$4.54 a gallon on Tuesday, according to the American Automobile Association, and is now around 50 cents off the record US$5.01 set in June 2022. On a seasonal basis, prices are already at an all-time high for this time of year.
US President Donald Trump has repeatedly promised that pump prices will fall after the Iran war ends, but the longer they remain elevated, the greater the political risk for the Republican Party headed into the midterm elections this November. Higher fuel costs also pose a risk for California Governor Gavin Newsom, who is widely expected to run for president in 2028.
Gasoline is highest in California, where motor fuel has topped US$6 a gallon, and they have risen rapidly in the Midwest, with some states approaching the US$5 mark. Elevated pump prices add to economic pain for drivers, stoke inflation and crush consumer sentiment.
Average prices eased slightly in April after the US and Iran announced a halt to hostilities, but they never fell below the US$4-a-gallon level first breached in mid-March. Pump prices have climbed more than US$1.50 since the start of the war, and markets will be watching for any breakthroughs toward ending the conflict following Trump’s latest remarks that “Great Progress” had been made.
The US$5-a-gallon threshold tends to be the “shock and awe” moment that leads to demand destruction, said Patrick De Haan, the head of petroleum analysis at GasBuddy. He added that US consumption still remains strong.
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US nationwide gasoline stockpiles are at their lowest level for this time of year since 2014, and Morgan Stanley expects further tightening into the summer, signaling the potential for historical seasonal lows. Benchmark gasoline futures, which hovered near US$3 a gallon for much of the Middle East conflict, surged in the final week of April to hit their highest since June 2022.
Uploaded by Magessan Varatharaja
