The prospect of summer drivers filling America’s roads is driving sharp increases in the price of gasoline, a sign of economic recovery and a boon for the pandemic-ravaged energy industry.
Elevated by the recovery in oil and growing consumer demand, gasoline prices at US pumps averaged $ 2.88 a gallon last week, according to AAA. That marks a 30% increase over this period last year, when lockdowns from the pandemic affected fuel use.
The price hike is an early-season treat for fuel makers, including Valero Energy Corp. and Phillips 66, after a rough year, helping to make energy stocks the best-performing sector this year. on the S&P 500. A proxy for refinery profit margins, calculated from the gap between gasoline and crude oil futures, recently approached its highest level in three years at more than $ 24 the barrel.
Some analysts see more earnings in the future. Prices tend to rise closer to summer, when millions of Americans drive to vacation spots and oil refineries mix more expensive fuels that don’t evaporate in the heat.
The gas price boom adds to the recent rally in other commodities such as copper, as well as improved employment and spending data, as signs that the economy is gathering momentum. At the same time, high fuel prices are hitting some consumers and businesses, while raising concerns about rising inflation.