The national average price for a gallon of regular gasoline on Saturday was $3.92 per gallon, according to the AAA. This is the highest price since April 2012.
Gas prices are up 26 cents since Wednesday and 39 cents, or 11%, from February 23, the day before Russia’s invasion of Ukraine. Each of these increases marks the biggest price spike since Hurricane Katrina hit the US Gulf Coast in 2005, devastating the nation’s oil and gas industry.
“It’s not over yet,” said Tom Kloza, global head of energy analysis at OPIS, which collects data from 140,000 gas stations across the country to come up with average AAA prices. Wholesale gasoline prices rose another 23 cents in Friday trading. Kloza said the increase in wholesale gas prices is likely to be passed on to consumers soon.
“It’s completely out of control,” he said.
The average price a year ago was $2.75 a gallon as prices were still recovering from the fall that occurred at the start of the pandemic. Self-isolation orders and business closures have reduced demand for gasoline.
The average family uses about 90 gallons a month, so a $1.17 increase in gas prices is costing this family about $105.50 a month, or just under $1,300 for a year, Kloza said.
Prices are rising because Russia is one of the world’s largest oil exporters, with most of its oil going to Europe and Asia. According to the Ministry of Energy, in December, Russian oil accounted for only 2% of US oil imports.
But oil is valued on world commodity markets, so Russia’s influence on world markets is felt everywhere.
Sanctions imposed on the Russian economy after its invasion of Ukraine free up Russian oil exports for now. But traders are reluctant to buy Russian oil due to uncertainty about being able to close a deal with restrictions on the Russian banking sector, as well as fears of finding oil tankers ready to call at Russian ports to ship any oil purchased. There were calls for the US to ban the import of Russian oil. But this is likely to have a limited impact on both global and US prices, as very little is shipped to the United States, Kloza said.
“It doesn’t matter. Canada, Mexico, Saudi Arabia are the big boys” in terms of U.S. oil imports, Kloza said. “Russia is a small player.”
Kloza said that even without a ban on Russian oil imports to the US, the average price could rise to a new record in the range of $4.25 to $4.50 per gallon. According to him, the rapid rise in gas prices makes a particularly strong impression on the public compared to the slow but steady rise in prices.
“When you get promoted so quickly and so dramatically, you really burn the audience,” he said.
On Friday, the statewide average in California jumped 13 cents to $5.07 a gallon, making it the first state to average over $5 a gallon. Its average price rose another 11 cents to $5.18 on Saturday.
There are currently 11 states—California, Hawaii, Nevada, Oregon, Washington, Alaska, Illinois, New York and Pennsylvania, Connecticut and Arizona, and Washington, D.C.—where the average price has already exceeded $4 a gallon, with this Connecticut, Arizona and Washington, DC, passed the $4 mark on the latest data.
Six more states—New Jersey, Massachusetts, Rhode Island, Vermont, Maryland, and Delaware—are within five cents of that $4 average.
The average price of a gallon of diesel is now $4.41 per gallon, up 15 cents from Friday. It hit $4 last weekend. While a relatively small number of passenger cars in the US use diesel, virtually all large trucks depend on it. And most trucking companies have a fuel surcharge schedule based on average prices, which means that the cost of transporting almost all business goods is increasing, and this cost increase is likely to be passed on to consumers in the form of higher prices as well.