US petrol prices hit fresh records this weekend but, despite the soaring cost, millions of American motorists took to the roads for the unofficial start of summer.
Even as the average cost of a gallon of gasoline broke $4.60 for the first time, about 35mn people were expected to take to the roads over the Memorial day weekend, according to the AAA motoring group.
That would mark a 5 per cent increase on last year’s Memorial weekend, which traditionally marks the start of America’s summer driving season.
But despite the early summer rush, high prices are beginning to take their toll on motorists. While drivers might be willing to splurge on holidays, they have cut back on day-to-day spending for commuting and social travel, experts say.
Petrol prices have climbed rapidly over the past two years as the reopening of the US economy pushed demand to outpace supply. Russia’s invasion of Ukraine in February shook crude markets and accelerated the rise in fuel costs.
With the national average sitting at $4.61 a gallon on Saturday, prices are more than 50 per cent higher than a year ago. In California, they have surpassed $6 a gallon. Diesel is even more expensive.
That has begun to force the US’s gasoline-guzzling drivers to rethink their car usage.
Petrol demand in the four weeks to May 20, the most recent data provided by the Energy Information Administration, was 8.8mn barrels a day. That was a 3 per cent slide on the previous week and almost 700,000 barrels below the same period a year ago.
“It definitely appears that high prices are causing what I would say is a low level of demand destruction,” said Patrick DeHaan, head of petroleum analysis at pricing app GasBuddy.
Did you take a road trip over the weekend? Are you changing your behaviour because of higher fuel prices? Email firstname.lastname@example.org and let me know. Here’s the rest of today’s news — Gordon
Five more stories in the news
1. Justice department probes police response to Texas school shooting
The US Department of Justice yesterday said it would conduct a review of the response by law enforcement officials to the shooting of 19 school children and two teachers at Robb Elementary School in Uvalde, Texas. Police officers have faced criticism since it emerged that it took about 90 minutes for them to respond to the 18-year-old shooter in last week’s attack.
2. ‘Top Gun: Maverick’ boosts hopes for summer cinema revival The sequel to the 1986 film that made Tom Cruise one of Hollywood’s biggest stars hauled in $248mn worldwide in its opening weekend. The action thriller was number one at the box office in the US and worldwide, bringing in $124mn in its first three days in North American theatres and another $124mn internationally, Paramount said.
3. Central banks launch most widespread rate rises for over two decades Central banks are executing the most widespread tightening of monetary policy for more than two decades, according to a Financial Times analysis. Policymakers around the world have announced more than 60 increases in current key interest rates in the past three months, the analysis revealed.
4. Street battles break out in key eastern Ukrainian city A Ukrainian official said that fierce street fighting erupted between government troops and invading Russian forces in Sievierodonetsk, one of the last major Ukrainian towns in the Luhansk region. Serhiy Haidai, governor of the eastern province, said more than 90 per cent of infrastructure and residential buildings in the city had been destroyed and the streets were “littered with Russian corpses”.
5. Populist to face leftwinger in Colombia’s election run-off Populist businessman Rodolfo Hernández pulled off a strong second-place showing in Colombia’s presidential election yesterday, comfortably clinching a run-off next month against former leftwing guerrilla Gustavo Petro. Hernández, an outspoken populist who has often been compared with former US president Donald Trump, won about 28 per cent of the vote while Petro won more than 40 per cent. A run-off vote will take place on June 19.
The day ahead
Memorial day Financial markets will be closed in the US today as the country observes Memorial day to commemorate fallen military service members. President Joe Biden will attend an observance ceremony at Arlington National Cemetery.
EU summit European leaders remain divided over a plan to halt the import of Russian oil ahead of a two-day summit which starts today in Brussels. Among the issues still to be ironed out are technical adjustments needed for central European refineries so they can handle different supplies, as well as construction and financing of alternative oil pipelines so that all Russian oil can be subjected to an embargo at a later stage.
WHO meeting The executive board of the World Health Organization holds its 151st session today in Geneva.
Policymakers, politicians and leading business figures from around the world will be joining the FT next month. The Global Boardroom on June 7-9 features prominent speakers including US secretary of state Gina Raimondo, Bank of Japan governor Haruhiko Kuroda and former Google chief executive Eric Schmidt. Register free today.
What else we’re reading
What is America’s end-game for the war in Ukraine? The Biden administration is trying to conduct a delicate balancing act between arming Ukraine and assuaging allies worried about a long conflict. While Washington said it would support the Ukrainian war effort, there is less clarity about what a strategic defeat for Russia would actually look like.
The Bank of Victor Orbán Hungary’s prime minister has long sought economic influence to match his political power. Now his plan to merge three of the country’s largest banks into a single institution is coming to life, realising hopes of serving his political goals as much as its customers.
Private equity cannot avoid the reckoning in markets Both the real economy and the financial system have entered a phase that is uncertain and destabilising. That spells trouble for private as well as public market investors, writes Mohamed El-Erian.
Why Africa’s Covid vaccine factory struggles to find customers Reluctance to get coronavirus jabs — and poor health infrastructure — means Africa could continue to be blighted by the disease long after Covid-19 has become endemic elsewhere, giving rise to more potent variants, experts warn.
‘Can we reallocate the window desks to those who come in the most?’ In the latest series of emails to his staff Rutherford Hall, communications strategist, hails “hybrid and flexible” working by introducing Wagu beef Wednesdays (or the gourmet Jackfruit alternative) and Thursday guest session speakers. Monday’s in-person meeting remains mandatory but Friday’s strategy session is moving to the metaverse.
This weekend’s Food & Drink special included a definitive guide to cooking and preparing sardines, three strawberry desserts from Ravinder Bhogal and a fantasy dinner party by Ukrainian London-based chef Olia Hercules.