Americans are speeding toward a new record-high national average gas price — the average could bust through July 2008 highs in a matter of days, gas-cost experts said Monday — as Russia’s war on Ukraine continued to rage and roil commodity markets in America.
In fact, by one count, that new record was hit Monday.
Over the weekend, the national average for a gallon of gas surpassed the $4 mark, inching closer to the record, which AAA said was set on July 17, 2008, at a cost of $4.11/gallon.
On Monday, the national average rested — for the time being — at $4.06, just a nickel a gallon from AAA’s record.
“We’re likely going to see a new record set this week for the national average,” AAA spokesman Devin Gladden told MarketWatch. The same goes for record highs in various states, he said.
Researchers at GasBuddy, a tech company analyzing gas-station prices, were prominent among those reporting that all-time highs were recorded Monday, according to researchers.
GasBuddy puts the national-average record at $4.10, and, as of late morning Monday, the average price stood at $4.08. By Monday afternoon, the average price had reached $4.11.
“Americans have never seen gasoline prices this high, nor have we seen the pace of increases so fast and furious,” said Patrick De Haan, GasBuddy’s head of petroleum analysis. That combination makes this situation all the more remarkable and intense, with crippling sanctions on Russia curbing their flow of oil, leading to the massive spike in the price of all fuels: gasoline, diesel, jet fuel and more,” he said.
“It’s a dire situation and won’t improve any time soon. The high prices are likely to stick around for not days or weeks, like they did in 2008, but months,” De Haan said.
He’s expecting the 2022 national average to break records. Earlier in the day, De Haan estimated the national average would get to $4.50.
On Monday morning, De Haan said the new record was coming on fast.
Of course, these are average prices, so the $4-per-gallon prices are relative bargain sin some places.
In California, the average price was $5.34 on Monday, AAA said. People in the Golden State could be hurtling toward “$5.50 per gallon with more stations charging $6 and beyond,” De Haan said.
When Russia launched its assault on Ukraine roughly two weeks ago, U.S. President Joe Biden countered with sanctions against Russia — with a warning to American consumers about the financial pain that likely lay ahead. “Defending freedom will have costs for us as well, here at home. We need to be honest about that,” Biden said.
Since then, oil buyers have been turning away from Russian crude, and now the U.S. and allies in Europe are considering a formal embargo on Russian oil imports. The three major stock benchmarks closed sharply lower Monday as investors weighed the potential consequences.
The Dow Jones Industrial Average DJIA, -2.37%, the S&P 500 SPX, -2.95% and the Nasdaq Composite COMP, -3.62% fell between 2.4% and 3.6% on the day.
How high gas prices go and how long the record streak runs depend largely on crude-oil futures, Gladden said.
Also remember that spring and summer are approaching, commonly described as peak driving season on the U.S., as Americans traditionally get on the road, whether to gather with friends and family or travel to regional tourism sites. Bouncing back from 2020 pandemic restrictions and worries, Americans took 6.1 billion trips over the 2021 Memorial Day weekend. That was a 13% increase from 2020, but still off 2019’s 6.9 billion trips, according to the Bureau of Transportation Statistics.
“‘Once you cross the $4 threshold, consumers start considering all sorts of options.’”
It’s worth noting that $4 now and $4 in 2008 are not the same thing. AAA’s July 2008 record of $4.11 a gallon would be $5.25 in January 2022 dollars, according to a Bureau of Labor Statistics inflation calculator.
July 2008’s consumer-price index showed a 5.6% year-over-year gain. This January’s inflation rate was 7.5%, having climbed to a 40-year high. February’s inflation rate is scheduled to be reported Thursday morning.
Even though gas doesn’t cost $5 in many places right now, AAA’s past consumer-sentiment surveys show different numbers have different psychological impacts.
“Once you cross the $4 threshold, consumers start considering all sorts of options,” Gladden said — at the $5 mark, drivers increasingly consider those options.
That includes combining trips, carpooling, reducing idling and making sure a car is well-maintained and has good air pressure to maximize fuel efficiency, Gladden said.
“The message to consumers is we should buckle up because there’s going to be more pain at the pump as prices increase,” he said.
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