Americans can expect increasing pain at the pump as rising oil costs continue to push up prices at gas stations across the U.S. That spike is unlikely to ease anytime soon as Russia’s war with Ukraine intensifies, experts say.
The current national average price of gas is $3.61 a gallon, up 26 cents from February and roughly a dollar from a year ago, according to data from AAA. In U.S. states with the priciest fuel, motorists already are paying nearly $4.50 a gallon, according to price tracker GasBuddy.
Patrick De Haan, head of petroleum analysis at GasBuddy, tweeted on Monday that the average gas price in some U.S. cities will reach $5 a gallon “in the next couple of weeks.”
California has the highest average gas prices, at $4.80 per gallon, followed by Hawaii, at $4.52, and Nevada, at $4.02. Nationally, the highest ever average price for gas across the U.S. was $4.11, in July 2008, according to AAA.
The average cost per gallon among the lowest 10% of stations around the U.S. is $3.14 per gallon, a 10-cent increase from last week, according to GasBuddy.
Fueling inflation
Oil prices surged another $7 per barrel on Wednesday after an agreement by the U.S. and other major governments to release 60 million barrels from their national reserves — half of them U.S. barrels — failed to quell supply concerns over Russia’s attack on Ukraine. The price of Brent crude oil, the international benchmark, rose to nearly $113 a barrel on Wednesday, its highest level since 2014. The U.S. benchmark topped $107, according to Bloomberg.
The decision made by the 31 member nations of the International Energy Agency was intended “to send a strong message to oil markets” that there will be “no shortfall in supplies” as a result of the invasion of Ukraine, but failed to move markets.
“Markets dismissed the notion that 60 million barrels of strategic reserves released will be consequential to the risks of Russian supply jeopardized,” Tan Boon Heng of Mizuho Bank said in a report. “Russia pumps more than that in just six days.”
Russia is a major exporter of crude oil, accounting for about 12% of the world’s supply. Any disruption to those exports is likely to drive prices at the pump higher for consumers, experts said.
“We think the Russia-Ukraine war will intensify global and U.S. inflation pressures by pushing up oil and gas prices,” Brian Coulton, chief economist with credit rating agency Fitch, said in an email.
Despite the sharp increase in gas prices causing a drag on consumer spending, analysts for now do not see the surge in oil prices as an immediate danger to U.S. economic recovery.
“While sustained higher energy prices pose downside risk to the outlook, we do not see them as enough to derail the recovery,” investment bank Barclays found in a March report.
“Fortunately, the shock to energy prices is hitting when the U.S. economic recovery is on relatively solid footing, with many states removing restrictions on activity as vaccination rates increase and COVID cases decline, and labor markets displaying notable resiliency in the face of the Delta and Omicron variants,” economists wrote.
—The Associated Press contributed to this report.