WASHINGTON — The average price for a gallon of gasoline in the U.S. hit a record $4.17 Tuesday as the country prepares to ban Russian oil imports.
The average price rose by 10 cents per gallon in one day, and it’s up 55 cents since last week, according to AAA data.
Gasoline stocks in the U.S. fell last week even as demand is on the rise with summer approaching.
The increase in gas demand and a reduction in total supply is contributing to rising prices at the pump, but skyrocketing oil prices are playing an increasingly large role.
The price of benchmark U.S. crude jumped 8% Tuesday to more than $129 per barrel.
Americans can expect the current trend at the pump to continue as long as crude prices climb, the AAA said.
Inflation could lead to even higher prices, as the $4.17 price tag for a gallon of gas doesn't account for inflation. Essentially, the last time gas was this expensive, inflation was lower, meaning the relative price of gas was higher (in the same way a 25 cent candy bar in 1980 now costs more than a dollar).
In today's terms, the record price would be equal to about $5.24 after accounting for inflation.
“Forget the $4 per gallon mark, the nation will soon set new all-time record highs and we could push closer to a national average of $4.50," said GasBuddy analyst Patrick De Haan. “We’ve never been in this situation before, with this level of uncertainty. ... Americans will be feeling the pain of the rise in prices for quite some time."
Energy prices are contributing to the worst inflation that Americans have seen in 40 years, far outpacing higher wages. Consumer prices jumped 7.5% in January, compared with a year earlier, and analysts predict a 7.9% increase when the government reports February figures later this week.
Oil prices soared early Monday before retreating. Benchmark U.S. crude surged to $130 a barrel overnight, then moderated to around $119, a 3% gain, in afternoon trading. The international price skyrocketed to $139 before falling back to about $123 a barrel. Major U.S. stock indexes were down more than 2%.
The United States is the world's largest oil producer — ahead of Saudi Arabia and Russia — but it is also the biggest oil consumer, and it can't meet that staggering demand with domestic crude alone.