The prospect of motorists crowding America’s highways in the summer is driving gasoline price hikes, a sign of economic recovery and a boon to the pandemic-ridden energy industry.
Buoyed by the oil recovery and growing consumer demand, gasoline prices at US pumps averaged $ 2.88 per gallon over the past week, according to the AAA. That’s an increase of 30% from last year, when the pandemic cut fuel consumption.
Rising prices are a gift at the start of the season for fuel producers, including Valero Energy Corp. and Phillips 66 after a tough year, making energy stocks the best-performing sector in the S&P 500 this year. A proxy for profit margins at refineries, calculated from the gap between gasoline and crude oil futures, recently approached the highest level in three years at over $ 24 a barrel.
Some analysts see further gains in the offing. Prices usually rise closer to summer, when millions of Americans drive to vacation destinations and petroleum refineries mix more expensive fuel that won’t evaporate in the heat.
Soaring gas prices join a recent rally in other commodities, such as copper, and are also improving job and spending data, as signals that the economy is gaining momentum. At the same time, high fuel prices are biting some consumers and businesses, while heightening concerns about rising inflation.