You are using an older browser version. Please use a supported version for the best MSN experience.

US Gas Prices Have Reached an All-Time High. How Much Steeper Can They Go?

CNET logo CNET 3/8/2022 Dan Avery
Prices at the pump in the US have reached a historic high. Getty Images © Provided by CNET Prices at the pump in the US have reached a historic high. Getty Images

As predicted, the price of gas in the US has surged to a record high: On Tuesday, AAA reported the national average for a gallon of regular gas was $4.17, shattering the 2008 peak of $4.11 a gallon 

The price at the tank on Tuesday represents an overnight increase of 10 cents a gallon, a 55-cent spike from a week ago and $1.40 more than drivers were paying this time last year.

The dramatic increase has followed the Russian invasion of Ukraine, with the average cost of gas going up 63 cents since Feb. 24, when the full-scale military attack began. But even outside of the geopolitical realm, experts say soaring demand and other factors are pushing it higher and higher.

Here's what you need to know about gas prices, including how high they could go, how the Ukraine crisis and other factors are impacting them, and what the Biden administration can do about it. 

How high will gas prices go?

Prices at the pump on Tuesday averaged almost $4.17 a gallon, a national record: If you fill up a typical 15-gallon gas tank once a week, that works out to over $250 a month. And don't expect that price to stop ticking higher: In California, gas is already averaging $5.44 a gallon -- a one-day increase of 10 cents -- and it's above the national average in at least another 18 states. 

The next threshold analysts are keeping an eye out for is $4.50 a gallon.

The cost of gas tends to rise in spring anyway, 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 on Saturday, when prices first crossed the $4 threshold. 

How much is the gas price spike costing you?

The impact of gas prices on an individual driver depends heavily on the type of car they own, how much they drive and how far. In addition, gasoline usage has varied wildly in the past two years, as the pandemic drove demand down deeply

But if we take the general average of 15-gallon gas tank filled up once a week, here's how much more you'll spend per month and per year compared to last week, last month and last year.

The impact of oil prices

The cost of gasoline is heavily influenced by the cost of crude oil, from which it's refined. On Sunday night, the price of Brent crude, the international benchmark, hit a high of $139.13 a barrel before settling at $122.89. On Monday, it reached $128.76 

By comparison, Brent crude oil averaged about $74 a barrel in December 2021.

On Sunday evening, West Texas Intermediate crude, the US standard, spiked to $130.50, the highest since July 2008, before retreating. 

President Joe Biden is expected to announce a ban on Russian oil imports as part of ongoing sanctions against the country. He may be moving unilaterally, as the US' European allies are much more dependent on Russian oil

"In a worst-case scenario, with Russian gas and oil fully cut from the global market," crude could go up to $140 a barrel, or even higher, DTN senior market analyst Troy Vincent told CNET. 

Daniel Turner, executive director of the energy advocacy organization Power The Future, told Fox Business that oil could "easily" hit $150 a barrel in the current geopolitical climate.

Fueled by a Brazilian oil worker strike and threats to supplies from Nigeria and Iran, Brent crude reached an all-time high of $147.50 in July 2008. At that time, average US gas prices peaked at $4.11 a gallon or, adjusted for inflation, about $5.21 a gallon in 2022 dollars.

If crude goes that high now, Vincent said, $6.50 or even $7 a gallon wouldn't be out of the realm of possibility.


Video: Gas prices expected to rise if Russia invades Ukraine (CBS News)

UP NEXT
UP NEXT

"At that point, though, it would trigger a global recession," he added. "People would start limiting their activities to the bare essentials."

Does the US get oil from Russia?

Russia is one of the world's largest producers of crude and natural gas, providing roughly 30% of the European Union's crude oil supply and almost 40% of its gasoline. 

While the US is the largest producer of crude and natural gas, it's also the largest consumer, producing over 18.6 million barrels a day while using over 20.5 million. 

Last year, the U.S. imported roughly 245 million barrels of crude oil and petroleum from Russia, almost 25% more than in 2020, making it our third largest outside source after Canada and Mexico. In November alone, about 595,000 barrels per day, or roughly 7%, came from Russia.

The US imports more crude oil than it produces, and Russia is our third-biggest source. Frederic J. Brown/AFP via Getty Images © Provided by CNET The US imports more crude oil than it produces, and Russia is our third-biggest source. Frederic J. Brown/AFP via Getty Images

To date, only Canada has banned crude oil from the former Soviet Union. President Biden is expected to announce a ban on Tuesday and Europe and other allies are moving closer to doing so.  

Eighty percent of Americans support the idea of banning Russian oild, according to a March 4 Reuters/Ipsos poll

"Our global addiction to oil keeps us locked into dangerous cycles of conflict and corruption, but we can choose a cleaner path to peace," Sen. Ed Markey, a Democrat from Massachusetts and supporter of the Green New Deal, said in a statement. 

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 while the crisis in Ukraine is having an immediate impact, 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 war in Ukraine is only one factor affecting rising gas prices. John M Lund Photography © Provided by CNET The war in Ukraine is only one factor affecting rising gas prices. John M Lund Photography

As it has in every industry, the pandemic has caused staffing issues at refineries. And there have been outages -- including a fire at a Marathon Petroleum plant in Louisiana.

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.

"The fundamental fact is that [the] market is well undersupplied in 2022," Credit Suisse's Manav Gupta wrote in an analysis, according to Barron's. "Even if geopolitical tensions ease over the next few weeks, near-term high oil prices are here to stay."

What can the White House do to lower gas prices?

President Biden has promised a strategy to "blunt gas prices" in the face of the Russian incursion.

Last week the United States and other members of the International Energy Agency agreed to release 60 million barrels of oil from their strategic reserves, with half coming from the US. But many experts believe 60 million barrels -- equal to about 12 days of Russian crude export -- won't make much of a ripple.

President Joe Biden is releasing barrels from the Strategic Petroleum Reserve to offset rising gas demand. Brendan Smialowski/AFP via Getty Images © Provided by CNET President Joe Biden is releasing barrels from the Strategic Petroleum Reserve to offset rising gas demand. Brendan Smialowski/AFP via Getty Images

And the reserves being released are mostly light oil: the US mostly imports a heavier grade of crude from Russia. "You can't always just swap out one for another easily," Stewart Glickman, an oil analyst for CFRA Research, told CNBC.

There have been calls for the US to further invest in clean energy to wean us off foreign oil, but that would be a long-term strategy.

Some legislators have called for a suspension of federal and state gas taxes -- a gas tax "holiday" -- to help lower prices. But economists warn that would have no effect on the oil supply and only encourage consumers to drive more. 

"It's a way for politicians to pretend they are making the situation better, when in fact they are making it worse," Maya MacGuineas, president of the Committee for a Responsible Federal Budget, wrote in an op-ed in The Hill last week.

How can consumers save at the gas station?

There's not much we can do to change the price of gas, but drivers can cut down on unessential trips and shop around for the best price -- even crossing state lines if it's not inconvenient. 

Apps like Gas Guru scan for the best gas prices in your region. Others, like FuelLog, track your car's gas mileage and can help determine if it is getting decent fuel economy. In addition, many gas station chains have loyalty programs, and credit cards have rewards programs that give cash back for gas purchases.

Shop around for the best price in your town. Dangubic/Getty Images © Provided by CNET Shop around for the best price in your town. Dangubic/Getty Images

DTN's Vincent advises against hoarding gas or other extreme measures but encourages budgeting more for gas. High energy prices have been a major contributor to inflation for a while, he said, and won't be going away immediately. 

"When the cost of crude rises, prices at the pump tend to reflect it very quickly," he said. "But gas prices tend to linger higher longer even when crude falls."

AdChoices
AdChoices
AdChoices

More from CNET

image beaconimage beaconimage beacon