The average price Americans are paying at the pump jumped to its highest level ever Tuesday as Russia’s invasion of Ukraine continued to fuel an unprecedented surge in oil prices, with a looming ban on Russian oil imports only expected to push prices even deeper into uncharted territory, experts say.
The average price of gasoline jumped 11 cents Tuesday to $4.17 per gallon, surpassing an all-time high of roughly $4.11 in July 2008 during the Great Recession, according to the American Automobile Association.
Prices have risen more than 55 cents amid the intensifying conflict in Ukraine over the past week, with the highest prices in California, Nevada and Oregon, where people are paying average gas prices of $5.44, $4.67 and $4.59, respectively.
Fueling the rising gas prices, the prices of oil benchmarks West Texas Intermediate and Brent Crude have soared more than 35% to $125 and $129.50 per barrel, respectively, since Russia invaded Ukraine.
The latest spike in oil prices follows reports that President Joe Biden will ban Russian oil imports as soon as Tuesday morning—intensifying concerns that diminished supply from one of the world’s top oil-producing countries will push surging oil prices even higher.
“That’s the cost of standing up for freedom,” Sen. Chris Coons (D-Del.) said Tuesday morning on CNN about the rising prices, adding that the White House was working closely with European allies on the Russian oil ban and positing gas prices would go up around the world—and “dramatically” in Europe—as a result.
“Forget the $4 per gallon mark,” Patrick De Haan, head of petroleum analysis at fuel-savings app GasBuddy, said in a statement, forecasting the national average for gas prices will likely push closer to $4.50, with prices in California reaching as much as $6.
“We’ve never been in this situation before, with this level of uncertainty,” says De Haan. “As we lose a major global producer under the weight of deserving bipartisan sanctions for invading a sovereign country, the cost is high. Americans will be feeling the pain of the rise in prices for quite some time, with little good news foreseen.”
What To Watch For
President Joe Biden is reportedly expected to announce a ban on Russian energy imports at about 10:45 a.m. ET on Tuesday. The move will ban Russian coal, natural gas and oil imports, according to CNN and CBS News. In a note to clients Friday evening, Goldman Sachs called surging oil prices “the key inflation risk” for the United States and forecasted prices could rise to as much as $150 per barrel—which JPMorgan analysts have warned could keep average consumer prices rising at the fastest rate in nearly 40 years.
Rising energy prices helped push inflation to its highest level in nearly 40 years, and stocks have struggled in recent months as Federal Reserve officials work to combat the surge by unwinding the central bank’s pandemic-era stimulus measures. After rising 27% in 2021, the benchmark S&P 500 index has tumbled 12% this year. Meanwhile, oil prices have surged in spite of efforts to temper gains. Last week, the International Energy Agency agreed to release 60 million barrels of oil from strategic reserves to help stabilize energy markets during the Russia-Ukraine conflict. Though helpful, the release amounts to only a couple weeks’ worth of normal Russia exports—“a proverbial drop in the bucket,” Raymond James analyst Pavel Molchanov told Forbes.