What is the highest price gasoline has reached in US history?
The national average cost of a gallon of gas in the US is approaching the $5 mark and could soon beat the historical record of $5.37 set in 2008.
The price of gas in the US continues to inch toward the $5 mark, a figure that is proving incredibly costly for American families and which represents an almost $2 average increase on the cost of a gallon of gas a year ago. According to the International Energy Agency, total demand is estimated to rise by 1.3% by the end of 2022, while supply continues to dwindle largely due to the Russian invasion of Ukraine and the sanctions imposed on the Kremlin by the international community, many of which have targeted the vast energy resources available to Vladimir Putin.
As of Friday, 10 June, the national average cost of a gallon of gasoline in the US stood at $4.986, according to the AAA. A month ago customers were shelling out $4.373 and this time last year a gallon was being sold for $3.073. With little end in sight to the ongoing energy crisis, it seems to be only a matter of time before the historical record for a gallon in the US is beaten: 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.
In grim news for motorists, JP Morgan has forecast the average price of gasoline could reach $6.20 per gallon by August this year, assuming that there is no swift resolution to the factors currently fueling the price rises.
Goldman Sachs have published similarly bleak predictions for the price of crude oil, the key component involved in the production of motor fuel and other products. The price per barrel is currently around $120 a barrel, but the investment bank believes that figure will hit $140 per barrel over the summer months.
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 a number of petroleum companies stopped buying Russian oil, and President Biden announced a complete ban on the importation of oil and natural gas from Russia in March. The US has opened diplomatic channels with Venezuela and has authorized Repsol to ship oil from the South American country to Europe to help those countries dependent on Russian reserves and in May, Washington permitted Chevron to negotiate its oil license with Venezuela’s national producer, PDVSA, in another indication that needs may eventually force the Biden administration into an uneasy energy alliance with Nicolás Maduro.