The average gas price in the U.S. surged to over $4 per gallon this week, as the invasion of Ukraine led to a new all-time high for the cost of gas. These prices are expected to remain elevated, possibly all summer — or at least until the supply of oil catches up with demand.
Western countries have been avoiding Russian oil purchases due to the conflict in Eastern Europe, which, along with growing post-pandemic demand, has choked the global supply of crude oil.
Regular-grade gas prices reached $4.173>How Russia affects crude oil prices
The U.S. imports 8% of its oil from Russia, according to Reuters. Compared to the European Union (EU), which imports 27% of its crude oil from Russia, according to 2019 E.U. data, the U.S. is much less dependent>Should we expect $6 or $7 per gallon gas prices?
In over 10 states, average retail gas prices are currently over $4.346, including California, which is averaging $5.444 at the pump. Because of that, many consumers are likely wondering whether these elevated prices will last.
"For now, 98 or 99% of Americans don't have to worry about $6 or $7 [per gallon], or some of those apocalyptic numbers," says De Haan, who argues that such an increase would require unforeseen events to further limit the global supply of oil, like oil rigs in the Gulf of Mexico being damaged by hurricanes, for example.
He expects the rate of price increases to level off, while remaining elevated for the rest of 2022, barring a big event or change in the crude oil market.
"We're now predicting a yearly national average of $3.99. I think that's pretty likely to stick," says De Haan. He says that prices at the pump reflect the current prices of about $115 for a barrel of oil. But if oil prices jump up by $20 per barrel — something not seen since 2008 — then the pace of retail gas price increases will accelerate again.
