Gas is headed for $5 a gallon nationwide
- Matt Phillips, author of Axios Markets
Wholesale prices for gasoline keep surging, meaning the angst Americans are feeling at the pump will last.
Why it matters: Gasoline prices are key inflation indicators to the American public, and their persistent climb is a headwind for both consumer spending — as gas bills eat into household budgets — and politicians hoping to stay in power.
Driving the news: Benchmark futures prices for gasoline hit a new high of $4.19 per gallon Thursday, as the Department of Energy reported that gasoline supplies last week hit their lowest level this year.
State of play: Unless those futures prices come down quick, we're about to blow past last week's record retail gas price of $4.71 a gallon, per AAA.
- That's a nominal record, not an inflation-adjusted high — the all-time inflation adjusted high for a gallon of regular gas was $5.38 set in June 2008, according to the U.S. Energy Information Administration.
How it works: The futures contract is the price for a kind of fuel known as RBOB, which stands for "Reformulated Blendstock for Oxygenate Blending."
- Basically, it's "unfinished" gas that is then blended with ethanol at gasoline distribution hubs and then delivered to stations where it's sold on to gas-hungry drivers.
The bottom line: The difference between futures prices and national average retail prices for a gallon of regular has averaged roughly 97 cents over the last three years.
- If that relationship holds, that means we're likely to see average gasoline prices of about $5.15 a gallon quite soon.
- And yes, Californians, we know you've been there for a while.