Should crude oil prices continue on the trajectory they’ve been following since March 1, the average price for a gallon of gas across America could hit $5 a lot sooner than anyone expects, following Russia’s invasion of Ukraine.
The average price per gallon was $4.06 on Monday, according to AAA, an increase of 45 cents in the past week. (The average price in California is already $5.34.) And with rising demand, lower supply and increasing crude prices, the next price barrier could be tested soon.
Crude is the largest component in the retail price of gasoline, according to the U.S. Energy Information Administration, making up 43% of the average price as of 2020 (which is lower than the 56% it made up from 2011-2020).
Between March 1 and March 7, the cost of U.S. Oil (as measured by WTI Crude oil prices) spiked from $97.41 per barrel to $118.72 as of 11:00 a.m. ET. That’s largely because of concerns about Russia’s invasion of the Ukraine. (Of the roughly 100 million barrels of crude used per day around the world, approximately 10 million come from Russia. Escalating sanctions from the European Union and U.S. Could prevent that oil from entering the market.)
Using a formula developed by BizFluent, a business-oriented social network, if WTI crude prices hit $140 and stay there, a $5 average would be a very real possibility.
By the end of this week, Patrick De Haan, head of petroleum analysis at GasBuddy, a gas price tracking service, says he expects the national average price per gallon to be as high as $4.25. (The record, as gauged by GasBuddy, was $4.10 in 2008, the equivalent of $5.25 per gallon when adjusted for inflation.) And while he notes that the situation is extremely volatile, De Haan doesn’t believe most of the country will see $5 .
“It’s hard to give any assurance on where we’re going, how high we’ll get and when we will get there,” he said on a YouTube Q&A Monday. “Most of the areas east of the Rockies are at low risk for some of the apocalyptic numbers like $5 and $6 per gallon…This is something that could change very quickly, but I don’t see that in most areas of the country just yet.”
There is some potential good news, though. While WTI Crude did surge above $130 briefly on Monday, it quickly fell back down to current levels. And some gas price experts say we could be getting close to a ceiling on crude prices.
Crude oil’s not the only factor impacting retail prices, either. Some senators have called for the suspension of the federal gas tax, which could reduce the price of gas by 18.4 cents per gallon.
And while the Russia-Ukraine conflict is the largest influencer on gas prices right now, we’re also moving into Spring, which traditionally sees prices increase anywhere from 25 cents to 75 cents per gallon, according to GasBuddy.
Never miss a story: Follow your favorite topics and authors to get a personalized email with the journalism that matters most to you.