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Americans are speeding towards a new record on average gas prices and they could bust through the July 2008 highs in a matter of days, gas cost experts said on Monday as Russia’s war continued to rage in Ukraine and roil commodity prices in America.
In fact, by one count, the new record happened 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, national average rested — for now — at $4.06, a nickel 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 new records in various states, he said.
Gas prices reached their new record Monday, according to researchers at GasBuddy, a tech company analyzing gas station prices.
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 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 to get to $4.50.
On Monday morning, De Haan said the new record was coming quick.
Of course, these are average prices, so the $4/gallon prices are relative bargain in some places.
In California, the average price was $5.34 on Monday, AAA said. People in the Golden State could be hurtling towards “$5.50 per gallon with more stations charging $6 and beyond,” De Haan said.
When Russia launched its assault on Russia roughly two weeks ago, U.S. President Joe Biden countered with sanctions against Russia — with a warning to American consumers about the financial pain laying 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 America and European countries are considering a formal embargo on Russian oil imports. The three major stock benchmarks were down Monday afternoon as investors weighed the potential consequences.
The Dow Jones Industrial Average
DJIA,
the S&P 500
SPX,
and the Nasdaq Composite
COMP,
all closed sharply lower on Monday.
How high gas prices go and how long the record streak runs on crude oil prices, which are mixed in with geopolitical questions surrounding Russia and Ukraine, Gladden said.
Also remember that spring and summer are approaching, two seasons when Americans traditionally get on the road to see friends and family. Bouncing back from 2020 pandemic restrictions and worries, Americans took 6.1 billion trips during the 2021 Memorial Day Weekend. That’s 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.’”
Four dollars now and $4 in 2008 are not the same thing. AAA’s July 2008 record of $4.11/gallon would be $5.25 in January 2022 dollars, according to a Bureau of Labor Statistics inflation calculator.
July 2008’s Consumer Price Index was 5.6% year-over-year. January’s inflation rate was 7.5%, climbing to a 40-year high. The numbers on February’s inflation rate are scheduled for release Thursday morning.
Even though gas doesn’t cost $5 on its face in many places for 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 — by the $5 mark, drivers increasingly consider other 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.
