Americans are now paying $4 a gallon for gas
· Business Insider
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- The national average price for a gallon of regular gas spiked past $4, according to AAA.
- Gas prices have surged amid escalating tensions in the Middle East, sending oil markets higher.
- Rising gas prices could fuel another round of inflation, an economist warns Business Insider.
Fueling up just got even more expensive.
On March 31, the national average price for a gallon of regular gas climbed to $4.018, according to AAA, crossing a key threshold that tends to grab drivers' attention — and strain household budgets. It had been $3.99 on March 30.
AAA data shows the national average stood at $2.98 a gallon on February 27, a day before the US and Israel bombed Iran.
The gas price run-up has accelerated amid the heightened tensions in the Middle East. Shipping through the Strait of Hormuz has been disrupted, where an estimated 20% of the world's oil supply flows. Meanwhile, ongoing attacks on regional production facilities have choked supply.
Those factors have pushed oil prices to multi-year highs. Brent crude futures, the global benchmark, reached as high as $117 in trading on Monday, March 30.
The last time the prices spiked above $100 was in the summer of 2022.
In the US, higher gas prices have been particularly pronounced in the West, where a string of states from Washington to Arizona have been paying north of $4 a gallon since March 12.
Seasonal dynamics are also working against American consumers. Spring marks the transition to summer-grade gasoline, which is more expensive to produce, as demand ramps up ahead of the busy driving season.
Carol Spieckerman, a retail analyst, told Business Insider that the impact of higher gas prices is "far-reaching and underestimated" for the entire US economy. She said that higher fuel costs have led to higher prices for airline tickets, groceries, and petroleum-based products — and those higher prices are harder for small businesses to weather.
"If you're a specialty retailer in a single market, higher gas prices mean fewer shopping trips and more cautious spending when customers do show up," she said. "By comparison, retailers like Walmart that serve as convenient one-stop shops and offer delivery in many areas will benefit. Amazon, which requires no travel at all, obviously gains ground."
Still, there are potential off-ramps, particularly if tensions ease, production rises, or governments tap strategic reserves.
For now, Americans are once again confronting a familiar reality: higher costs everywhere — from the checkout line to the gas pump.
Read the original article on Business Insider