Gas prices have soared in the past week, jumping 28 cents in just seven days and lifting the national average on Wednesday to a record $4.96 per gallon, according to AAA. In 16 states, the typical gas price has already topped $5 per gallon, and experts say the rest of the nation could soon reach that painful milestone.
The latest surge in fuel costs comes after months of steadily rising prices at the pump, which has hit consumers hard as they also grapple with rising food and housing costs. But there may be no relief in the near-term, according to analysts, given the dynamics driving the startling jump in gas prices.
“Now expecting national average to hit $5/gal by June 10, one week earlier than expected,” Patrick De Haan, an analyst for gas-tracking service GasBuddy, tweeted Monday.
Americans are paying record-high prices for gasoline as the summer travel season kicks off, but so far, consumers haven’t changed their driving habits, according to AAA. At several stations in California, fuel now tops the federal minimum wage of $7.25 per hour, while one station in Oregon is charging $7.40 a gallon, according to GasBuddy.
Several factors are combining to push up fuel prices. The benchmark Brent crude oil is now trading at about $120 per barrel, or 68% higher than a year earlier, according to FactSet. Behind that surge is the failure of refineries to keep up with rising demand from consumers and businesses as the economy recovers from the initial peak of the COVID-19 pandemic.
Meanwhile, Russia’s war in Ukraine is also contributing to higher gas prices. The European Union’s decision to drop most of the oil it imports from Russia over its attack on Ukraine is pushing crude oil higher, with JP Morgan analyst Natasha Kaneva forecasting earlier this month that Brent prices will peak at an average of $122 a barrel in June, partly due to this development.
The reason for banning imports of Russian oil is to hurt the nation in the long-term by cutting off its major source or revenue, which is fossil fuel exports. But in the short-term, such bans are hurting Western consumers more since the embargoes push crude oil prices even higher.
In the U.S., drivers are paying an average of at least $5 a gallon for fuel in 16 states, according to AAA. They are, in ascending order:
- Maine: $5.02 a gallon
- Massachusetts: $5.02 a gallon
- Idaho: $5.02 a gallon
- New Jersey: $5.03 a gallon
- Pennsylvania: $5.03 a gallon
- Ohio: $5.06 a gallon
- Arizona: $5.18 a gallon
- Michigan: $5.21 a gallon
- Indiana: $5.23 a gallon
- Alaska: $5.46 a gallon
- Illinois: $5.53 a gallon
- Washington: $5.48 a gallon
- Oregon: $5.48 a gallon
- Hawaii: $5.49 a gallon
- Nevada: $5.56 a gallon
- California: $6.39 a gallon
Several other states are on the verge of reaching the $5 threshold, such as Utah, where gas is now $4.98 a gallon, and Vermont, where it is $4.99 a gallon.