Have gas prices ever been higher than they are now in the USA?

The Russian invasion of Ukraine, combined with pre-existing inflationary pressures, has sent the average price of gasoline in the United States soaring to new highs this week.

AAA reported that the record for the highest average price of a gallon of gas was broken several times, most recently with a new high of $4.33 on Friday. That represents an increase of around 50 cents per gallon in the past seven days and experts are warning that a $5 per gallon national average is not out of the question.

However while the price at the pump has never been higher, in real terms this week’s price surge does not represent the most expensive gasoline has ever been. In July 2008 the price of gas hit $4.14 per gallon, which when adjusted for inflation would be around $5.37 in today’s dollars.

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Why are gas prices so high?

The current high price of gas can be attributed to a combination of factors that have conspired to send fuel prices soaring. Firstly, as pandemic restrictions were removed in 2021 the American economy began to grow swiftly, bringing with it a spell of sustained high inflation.

Typically the cost of living increases slightly every year but after a tough 2020 the economy bounced back sharply in 2021 and prices rose accordingly.

The pandemic not only created a temporary lull in American society but also caused unimaginable disruption to the supply chains that provide for it. It became more difficult to transport the crude oil from which gasoline is made, and the price per gallon rose again.

But the biggest and most recent factor in the sky-high cost of gas is the Russian invasion of Ukraine and the economic sanctions that have been levied as a result. Russia has huge natural reserves of crude oil and was responsible for around 8% of the United States’ annual supply of oil.

However in response to the invasion number of petroleum companies stopped buying Russian oil, and earlier this week President Biden announced a complete ban on the importation of oil and natural gas from Russia.

The restriction was designed to cut off a vital stream of revenue for President Putin, but it has also cut off a vital stream of oil for the US. The increased scarcity of crude oil has made it more valuable and so the cost of products made using it, such as gasoline, has risen too.

Speaking to NPR Joe Brusuelas, chief economist at research firm RSM, warns: "Rising prices will disproportionately hit poor, working class, and middle class Americans."

He predicts that with no end in sight to the conflict in Russia and inflation rates remaining high, Americans will "experience a once in a lifetime source of sticker shock through the remainder of the year.”