Gas prices in the US have hit an all-time high for the second day in a row: The national average has reached $4.25 a gallon, up from $4.17 on Tuesday.
Like Tuesday’s price, Wednesday’s rises above a 2008 peak of $4.11 a gallon, AAA reported, and it also represents a nearly 60 cent spike from just a week ago.
The dramatic increase has followed the Russian invasion of Ukraine, with the price of gas going up about 63 cents a gallon since Feb. 24, when the attack began. Outside the geopolitical realm, rising demand, skittishness by OPEC and other factors are pushing gas prices even higher.
Here’s what you need to know about gasoline prices, including how high they could go, how the Ukraine crisis and other factors are affecting them, and what the Biden administration can do about it.
How high will gas prices go?
Prices at the pump Wednesday averaged $4.25 a gallon, a new record for the second day in a row. If you fill up a typical 15-gallon gas tank once a week, that works out to more than $255 a month. Don’t expect that cost to stop ticking higher. In California, gas is already averaging $5.57 a gallon — a one-day increase of 13 cents — and it’s above the national average in at least another 18 states.
Last year at this time, motorists were paying only $2.80 a gallon. The next threshold analysts are keeping an eye out for is $4.50 a gallon nationwide.
The cost of gas tends to rise in spring, as refineries undergo maintenance before the summer driving season, but the war in Ukraine is exacerbating the situation.
“As Russia’s war on Ukraine continues to evolve, and we head into a season where gas prices typically increase, Americans should prepare to pay more for gas than they ever have before,” Patrick DeHaan, head of petroleum analysis at price tracker GasBuddy, said in a statement Saturday when prices first crossed the $4 threshold.
What’s making gas prices soar?
“Russia’s invasion and the responding escalating series of financial sanctions by the U.S. and its allies have given the global oil market the jitters,” AAA spokesperson Andrew Gross said in a statement last week. The spike in gas prices is “a grim reminder that events on the far side of the globe can have a ripple effect for American consumers,” Gross added.
But though the crisis in Ukraine is having an immediate impact, DTN’s Vincent said it’s hardly the sole factor.
“We’ve had a supply-and-demand imbalance for a while — and it will remain, regardless of whether this conflict goes away,” he said.
The pandemic caused oil demand to plummet in spring 2020, sending the market into a tailspin. In response, OPEC and other oil-producing nations put the brakes on production. Even though demand is ratcheting up toward near pre-pandemic levels, they’ve rejected calls for higher output.
Still smarting from the 2020 oil bust, US oil companies are also gun-shy about increasing drilling. Even if they start drilling more today, it could take more than six months to increase supply. Tapping new sites requires clearing government regulations, which can take years.
Major US refineries have also been hit with a number of disasters, including two hurricanes and an explosion at an ExxonMobil facility last year, and a fire at a Marathon Petroleum plant in Louisiana last month.
As it has in every industry, the pandemic has caused supply chain and staffing issues at refineries, as well.
“They can’t find people, and can’t find equipment,” Robert McNally, president of consulting firm Rapidan Energy Group, told CNN. “It’s not like they’re available at a premium price. They’re just not available.”
A colder winter across North America also led to higher demand for heating oil, and pandemic-driven online shopping has taxed diesel, which fuels all those trucks. As a result, gas was predicted to surpass $4 a gallon even before the Ukraine crisis.
