The price of a gallon of unleaded nears $7 at this station in Los Angeles. (Getty Images)
U.S. drivers are now paying more for gasoline than at any other time in history as demand surges and the war in Ukraine threatens global oil supplies.
Average pump prices in the U.S. are now $4.173 per gallon, the highest level in records going back to 2000, according to auto club AAA. That’s up 11 cents since Monday. Government data going back to 1990 show prices have never been higher than they are now — though If indexed for inflation, the July 2008 all-time national average gas-price peak of $4.10 would be the equivalent of $5.31 today, so in constant dollars 2008 remains the peak price.
In California, the most expensive U.S. state for drivers, prices have surged to $5.444 a gallon but were approaching $7 in some places in Los Angeles.
Record pump prices pose a major challenge for U.S. President Joe Biden, whose attempts to cap gasoline costs and rein in inflation have so far had little impact. That means American households — already slammed by soaring food costs and electricity prices — are getting hit on all sides.
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Prices are probably not coming down anytime soon. U.S. gasoline futures hit record highs on Monday as the market reckoned with lost Russian oil-product exports that could be cemented by a formal ban — which the White House is expected to formally announce today. Despite the pain it may cause at the pump, a majority of Americans in a Reuters/Ipsos poll favored a ban as punishment for Russia’s war against Ukraine, even if it forces pump prices up even further.
Surges in futures markets tend to precede pump-price gains by a few weeks.
Russian oil made up only about 3% of all the crude shipments that arrived in the U.S. last year, data from the U.S. Energy Information Administration show. But when also including other petroleum products, like unfinished fuel oil that can be used as a feedstock to produce gasoline and diesel, Russia accounted for about 8% of the U.S.’s 2021 petroleum imports. And if other nations join in a ban on Russia’s lucrative oil trade, which helps fund the war against Ukraine, it could affect the overall global market.
“Product markets are even tighter than crude markets. Russia is a major product exporter, and those have been hit even harder than crude,” said John Auers, executive vice president of Turner Mason & Co.