The price of gasoline is starting to surge everywhere, an inflationary omen for central banks and governments the world over. Read on.
Gasoline prices are often a topic of contention as those costs can be an essential daily expense for many, alongside food and rent. Energy prices are one of the many factors that have contributed to surging inflation globally. In the U.S., reining in prices at the pump will also be a crucial issue for President Joe Biden with the next election just over a year away, especially after he ordered the sale of a huge chunk of the nation’s strategic petroleum reserve last summer.
For perspective, a one-cent rise in a gallon of gasoline in the U.S. takes away about US$1.15-billion annualized spending power, according to Brett Ryan, senior economist at Deutsche Bank AG. That means the US$1.30 a gallon drop in the second quarter saved consumers US$150 billion, and that’s money they could spend on other goods and services. Now, this tailwind could turn into a headwind and drag on spending should prices continue to rise materially, Ryan said.
These expansions haven’t been enough to offset a string of unplanned outages including Exxon Mobil Corp.’s Baton Rouge unit in the U.S., Shell PLC’s Pernis site in Rotterdam and ENEOS Holdings Inc.’s’ Mizushima facility in Japan. These disruptions tightened supplies at a time when inventories are still low.
In China, the largest crude importer, a range of indicators point to buoyant demand. Congestion levels in the 15 cities with the most car registrations have risen by about a quarter compared with January 2021, according to data from Baidu Inc. tracked by BloombergNEF. At the same time, commercial gasoline inventories have been estimated at the lowest since at least 2019.Article content
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