US Citizens Confused by Soaring Fuel Prices, Wallets Are Exploding

Jakarta –

Supposedly, the price of fuel oil (BBM) in the United States (US) decreased because bad weather made US citizens lazy to go out. However, fuel prices have soared.

According to AAA, quoted by CNN, Monday (30/1/2023), the average price of regular fuel jumped US$ 3.51 or around IDR 52,611 (exchange rate of IDR 14,988/dollar) per gallon last Friday. Up 12 cents in the past week and 41 cents in the past month.

AAA said several states experienced much larger gains over the past month. They included Colorado (98 cents), Georgia (70 cents), Delaware (62 cents), Ohio (60 cents), and Florida (59 cents).

The spike in fuel prices this winter caught the attention of US drivers who are currently also struggling with surging supermarket prices. The high price of fuel is not due to demand, but due to supply.

Extreme weather across much of the US towards the end of last year caused a series of outages at refineries that produce gasoline, jet fuel and diesel. One such example is at the Suncor refinery, Colorado.

The refinery was disrupted due to extremely low temperatures. As it was about to resume operations, a fire broke out and equipment was damaged at the Suncor refinery. As a result, the Suncor refinery was closed for several weeks. This explains why gas prices in Colorado have soared nearly US$1 per gallon over the past month.

Since US oil prices fell to US$ 71.02 per barrel on December 9, 2022, US oil prices have now jumped 16% to US$ 82.30 last Friday. The increase was partly driven by expectations of higher world demand as China relaxed its Covid-19 policies.

From this, the good news is that the problem with oil refineries is only temporary, which means that supply must meet demand. The bad news, experts warn that gas prices may continue to rise.

President of Lipow Oil Associates Andy Lipow estimates that the average national fuel price will reach US$ 3.65 per gallon by spring. In line with Lipow, GasBuddy’s Chief Petroleum Analyst Patrick De Haan is worried that the price spike in the spring will actually be faster.

“Instead of $4 a gallon happening in May, it could happen in early March. There is more upside risk than downside risk,” said De Haan.

The return of fuel prices to US$ 4 will be very painful for drivers and undermine consumer confidence. It could also complicate the inflation picture as the Fed is debating whether to slow down its rate hike campaign.

(dna/dna)