Topline
Prices at the pump hit a new all-time high on Tuesday as suppliers struggle to meet global demand amid ongoing conflict in Ukraine, rising crude oil prices and rebounding demand after years of reduced consumption during the Covid-19 pandemic.
Key Facts
The national average price of regular gasoline jumped to $4.374 per gallon on Tuesday, according to the American Automobile Association (AAA), surpassing the former record of $4.33 in March.
Prices at the pump have risen more than 20 cents in the past two weeks and by around 80 cents since Russia launched its invasion in late February.
People are paying most for gas in California, Hawaii and Nevada, with regular gas costing an average of $5.84, $5.30 and $5.13 per gallon, respectively.
Gas prices are increasing most rapidly in Michigan and New Jersey, according to AAA data, respectively jumping 26 cents and 25 cents from the week before as of Monday.
Tangent
The national average for diesel also hit a new record on Tuesday, reaching $5.550 a gallon. While consumers notice higher gas prices whenever they use the pump, higher diesel prices can have a much wider impact on costs as it is widely used to power freight vehicles transporting goods.
Key Background
Gas prices are closely tied to crude oil prices, which have been rising over recent months as oil producers struggle to boost supplies after demand dipped during the Covid-19 pandemic. Western sanctions on Russia—one of the world’s leading oil exporters—for invading Ukraine such as the U.S. ban on Russian energy have strained the supply chain further. Additional sanctions, including the EU’s proposed ban on Russian oil from, are set to compound the issue and experts warn prices could continue to grow as more people hit the road in summer.
Further Reading
Analysis: Oil’s journey from worthless in the pandemic to $100 a barrel (Reuters)
