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Consumer Spending · Corporate Costs · Fuel Prices · Inflation
Record high gasoline prices, reaching a national average of $4.589 per gallon and over $6 in California, are severely impacting consumers and major corporations like Target and Walmart, driving up operational costs and contributing to decades-high inflation.
The surge stems from a jump in oil prices, exacerbated by Russia's invasion of Ukraine, pre-pandemic underinvestment in energy production, and output cuts during the pandemic, followed by a rapid post-reopening demand surge. Constrained refining capacity and record diesel crack spreads further inflate costs.
Households now spend $5,000 annually on gasoline, according to Yardeni Research, up from $2,800 a year ago. Companies are reporting significant financial hits: Target CEO Brian Cornell stated a $1 billion incremental fuel cost, Walmart President Doug McMillon noted fuel costs ran $160 million over forecast, and United Airlines CEO Scott Kirby projects $10 billion more in jet fuel costs than in 2019.
Experts like John Kilduff of Again Capital predict a $5 national average this summer, while Bob McNally of Rapidan Energy Group suggests a recession is necessary to curb product inflation, as demand destruction has not yet occurred.
