In another blow to the US economy facing high energy prices and soaring electricity rates, prices at the pump have escalated to fresh record highs for the year. The national average price for regular gasoline climbed more than four cents on Tuesday to $4.37 a gallon, according to AAA. That takes out the prior record of $4.33 set on March 11. Prices are up 17 cents in the past week alone! Pump prices are up around 25% since Russia’s invasion of Ukraine roiling global energy markets.
The national average dipped to as low as $4.07 a gallon back in April after the release of oil from emergency reserves. That relief was short-lived and minor.
Energy Prices Could Get Worse
Real gas prices, adjusted for inflation, would need to climb above $5.30 a gallon to break the records set in 2008, according to the US Energy Information Administration. The latest spike in gas prices will only make today’s inflation problems worse, and for the most part won’t be captured in Wednesday’s closely watched inflation report.
Many are concerned higher prices are coming. They expect retail prices to jump to $4.50 a gallon in the next week to 10 days.
The Energy Spike
The gas spike will add to inflationary pressures that have raised fears of incredibly high electricity rates, potential economic recession, and soured Americans’ views on the economy.
Beyond concerns about China’s Covid lockdowns, oil dropped because it was swept up in the gloom-and-doom on Wall Street as stocks dropped. Crude prices were just slightly lower Tuesday morning.
Gas prices move with a lag to oil, and the good news is that oil prices fell sharply Monday, perhaps taking some pressure off pump prices. US oil tumbled 6% to $103.09 a barrel on Monday, its worst day since late March.