U.S. Retail Gasoline Prices Surge to Highest Since 2014

(Bloomberg) -- The average price of gasoline surged to the highest in more than seven years, posing a fresh challenge to U.S. President Joe Biden as he tries to combat surging fuel costs.

Regular gasoline rose to $3.423 a gallon, the highest since September 2014, according to data on the website of AAA. Oil prices are powering higher amid signs that demand is surpassing the market's expectations and as constraints to supply crop up in some locations.

The surge in fuel prices at the pump comes despite efforts from the Biden administration to try and tackle inflation that has been hitting the highest level in decades. Key oil-consuming nations already have released supplies from emergency reserves, but that has done little so far to tame a rampant market for crude and refined products. U.S. crude prices on Friday were trading above $90 a barrel.

“Having drawn a line in the sand at $80 crude and about $3.30 gasoline, $3.40-plus gasoline will raise the pressure” on the Biden administration, said Paul Horsnell, head of commodities research at Standard Chartered. It's possible the administration is holding back on another release of emergency reserves in case supplies are needed amid heightened tensions with Russia, he added.

There still could be worse to come for consumers, too. The U.S. uses different types of gasoline in summer and winter, with the switch away from winter fuel occurring this month. Summer gasoline is currently about 10 cents a gallon more expensive, indicating retail prices likely will see further increases in February.

Gasoline consumption is on track to reach summer 2019 levels, Valero Energy Corp. Chief Commercial Officer Gary Simmons said in the company's most recent conference call. Nationwide inventories are growing -- as they should at this time of year -- but remain below average levels of the past five years.