US gas price hits record as Russia continues to invade Ukraine

Tom Cluza, global head of energy analysis at OPIS, said gas price hikes aren’t going to stop any time soon. Wholesale prices for gasoline rose 1 cent to as much as 12 cents a gallon in trading Monday in various markets across the United States. These increases will be passed to the drivers at the pump in a relatively short time.

“I think we’ll get to $4.50 a gallon before he turns around,” Kloza said. “The danger is how bad this is, how long this lasts. Even $5 a gallon nationwide is possible. I wasn’t expecting that before the fight started.”

Why are gas prices rising?

Russia is one of the world’s largest oil exporters, with most of its production going to Europe and Asia. Russian oil made up just 2% of US imports in December, according to Energy Department data. But oil is priced on global commodity markets, so the effect is being felt everywhere.

This is what investors are betting on contracts for future oil delivery, Kloza said, which has driven up crude oil prices.

“If this becomes a real ban, and not just a de facto ban, the fear is that it will last longer,” he said.

Where gas is more expensive… and cheaper

In some parts of the United States, $4 a gallon of gas is still a rarity. A large swathe of the central states, from North Dakota south to Texas, averaged Monday’s AAA reading of just $3.74 a gallon.

But prices are increasing rapidly everywhere. The lowest statewide average in Monday’s AAA reading is in Missouri, where unleaded stands at $3.63 a gallon. But that’s up 30 cents, or 9%, in just the past week.

As of Monday morning, there were 21 states, plus Washington, D.C., where the rate was $4 or more. The Northeast and Mid-Atlantic, as well as the West Coast, Nevada, Arizona, Illinois, Alaska, Hawaii, Michigan, and Florida, had statewide averages of $4 or more. Other states will likely cross the $4 a gallon mark when statewide averages are released on Tuesday. Indiana, Virginia and Georgia were less than a nickel away from that mark in Monday’s reading.

Prices are highest in California, with a statewide average of $5.34 a gallon on Monday.

Anti-inflation

The average American household uses about 90 gallons of gas per month. So just the 60-cent increase in the average price since the start of the war in Ukraine would cost that average family about $54 a month more than they were spending on gas before this latest hike.

And it’s not as if prices were low before the recent rise in gas prices. A year ago, the average price for a regular gallon was $2.77 a gallon, so drivers are paying $1.37 a gallon more now. That comes to roughly $125 a month, or roughly $1,500 a year, if prices keep rising for that long.

The record figure of $4.11 set in 2008 is still $5.25 a gallon in dollars today when adjusted for inflation. And vehicles as a group are more fuel-efficient today than they were in 2008, with significantly more hybrid, electric and plug-in vehicles, and better overall fuel economy than the fleet of cars on the road 14 years ago.