Copyright © 2022 Albuquerque Journal
It’s a Memorial Day weekend to remember as vacationers kick off the summer driving season with the highest holiday gas prices ever recorded.
New Mexico’s statewide average gas price stood at $4.32 a gallon Thursday, according to AAA New Mexico. That’s just one cent lower than last week, when the state hit an all-time peak of $4.33 a gallon, marking nearly five straight weeks of consecutive price hikes.
Nationally, the average price of gas came down by just under a penny this week, settling at $4.59 a gallon as of Thursday, said GasBuddy Head of Petroleum Analysis Patrick De Haan.
But that’s still a record holiday high.
“This will be the most expensive Memorial Day that we’ve ever seen, and things will likely remain that way in coming weeks,” De Haan told the Journal. “… It’s looking to be the most expensive summer ever. Prices are unlikely to go below $4 a gallon any time this summer, and could still go slightly higher.”
With inflation in general at a four-decade high, local consumers are feeling the squeeze. Many told the Journal on Wednesday that they’re struggling to balance family budgets, cutting down on everything from groceries to entertainment.
At the Murphy Express at 2707 Carlisle NE, Joleen Bazan said she’s fighting to make ends meet.
“I’ve got three kids who I work to provide for, but, with gas prices going up so much, it’s getting really difficult,” Bazan said while filling her Kia Soul at $4.11 a gallon. “It puts a real damper on spending. We’re limiting ourselves on everything.”
With Memorial Day considered the unofficial start to summer, Americans are still poised for a busy travel weekend, despite gas prices.
AAA projects 3.1 million Mountain Region residents will travel 50 miles or more from home during the holiday, up 8% compared with last year. And, nationwide, it projects more than 39.2 million people will venture out, up about 8.3% from 2021.
The vast majority will travel by car. But many will likely limit the extent of their outings, not just during Memorial Day, but also throughout the summer.
Robert Mosby said he cancelled plans to drive to Texas over the weekend because of gas prices.
“I was going to do a lot of ‘staycations’ in New Mexico this summer, but now I’ll probably limit that to just two or three sites,” Mosby told the Journal while filling his Chevy Silverado truck at Murphy Express on Carlisle. “It normally costs me about $60 to fill up, but now its more like $80 or $85. That’s cutting into everything, like eating out on weekends or going to the golf course, because it’s just too expensive.”
Surging oil prices are generally to blame for the spiraling cost of gasoline. U.S. benchmark West Texas Intermediate stood at about $114 a barrel as of Thursday – nearly double the price from a year ago and the highest cost for crude in at least a decade.
Many factors are pushing oil prices up, beginning with fallout from the pandemic, which cut global production to record lows in 2020 as countries went into lockdown and world demand for fuel plummeted. Then, as economies reopened last year, demand rapidly rebounded far faster than supply, pushing prices up beyond prepandemic levels by mid-2021.
Domestic U.S. production has yet to climb back to the 13 million barrels per day it reached just before COVID-19 hit, registering at 11.9 million bpd as of April, according to the U.S. Energy Information Administration. It likely won’t reach pre-COVID levels again until at least year-end 2022, or even 2023.
And worldwide oil supplies still remain about 3 million bpd below global demand, said New Mexico State University economics professor emeritus Jim Peach.
Russia’s invasion in Ukraine is also wreaking havoc on world oil markets. When the war began in February, the U.S. banned oil imports from Russia – which accounts for about 10% of global supplies – and the European Union is now also working to impose a ban, significantly driving crude prices up.
“Putin’s war in Ukraine has thrown a monkey wrench into everything,” Peach told the Journal.
Apart from problems with crude supply, a shortage of refining capacity to process oil into gasoline is also impacting prices at the pump, because many refineries shut down at the height of the pandemic and are only slowly being replaced, said Raoul LeBlanc, vice president for nonconventional oil and gas at IHS Markit, a global energy consultant.
“Between high oil prices and lack of refining capacity, it’s a double whammy hitting consumers right now,” LeBlanc told the Journal. “Rising demand at a time of constrained supply and refining is a recipe for a price squeeze on consumers.”
With midterm elections fast approaching and consumer frustration rising, President Joe Biden and Democrats in Congress are under increasing pressure to lower gas prices and stunt inflation, but there’s little they can do.
Biden recently announced the release of 180 million barrels of oil from the U.S. Strategic Oil Reserve, pumping about 1 million bpd into the market. But with prices still rising, House and Senate Democrats have stepped up pressure on domestic energy companies to produce more crude, blaming industry for returning record profits from soaring oil prices back to investors instead of pumping it into production to increase output.
That’s true. Oil companies are under immense pressure from lenders and investors to return more profits to shareholders through slow, but steady, growth, rather than pursue unbridled expansion, LeBlanc said.
But post-pandemic supply chain problems, labor shortages and inflation are also major problems constraining production, he said.
The real problem is global imbalance in supply and demand, said De Haan of GasBuddy.
“There’s no simple way out of this,” De Haan told the Journal. “It’s not a U.S. problem – it’s a global problem.”
Consumers, meanwhile, are stuck in the middle.
“It’s been pretty hard,” said Martin Ramirez while pumping gas at the Carlisle Murphy Express.
Ramirez provides roadside diesel repair service for semi trucks across the state through his company DMR, which he runs as a two-man operation with one employee.
“We’re constantly on the road and now it’s really expensive,” Ramirez told the Journal. “I can’t just pass on the costs to customers because I’ll lose clients. My profit margins have gone down a lot.”
Likewise, Uber driver Martin Gurule said his income has dropped by up to 25% on some days, depending on passenger demand, because he’s spending so much more on daily fill-ups.
“I’m surprised at how fast gas prices have spiked,” Gurule said while pumping gas at Sam’s Club near Renaissance NE in Central Albuquerque. “Everything is just going up like crazy.”