Unusual Leap in Gas Prices Puts $3 a Gallon in Sight

The prospect of summer drivers crowding U.S. highways is powering steep gains in the price of gasoline, a sign of economic recovery and a boon for the pandemic-ravaged energy industry.

Lifted by oil’s recovery and growing consumer demand, gasoline prices at pumps in the U.S. hit an average of $2.88 a gallon over the past week, according to the AAA. That marks a 30% increase over this time last year, when the pandemic’s lockdowns slammed fuel usage.

Rising prices are an early season gift for fuel makers including Valero Energy Corp. and Phillips 66 after a bruising year, helping to make energy shares the top-performing sector this year in the S&P 500. A proxy for profit margins at refiners, calculated from the gap between gasoline and crude-oil futures, recently neared its highest level in three years at more than $24 a barrel.

Some analysts see further gains ahead. Prices tend to climb closer to summer, when millions of Americans drive to vacation spots and petroleum refiners blend costlier fuel that won’t evaporate in the heat.

Booming gas prices join a recent rally in other commodities such as copper, as well as improving data on jobs and spending, as signals that the economy is gathering momentum. At the same time, elevated fuel prices are biting some consumers and businesses while adding to worries about rising inflation.

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