Topline
The average price Americans are paying at the pump jumped to its highest level in nearly a decade Friday as Russia’s invasion of Ukraine fuels a rapid surge in oil prices, and analysts are already warning people to brace for even higher prices in the weeks to come.
Key Facts
The average price of gasoline jumped 11 cents Friday to nearly $3.84 per gallon, marking the highest level since March 2012, an AAA spokesperson confirmed to Forbes.
Prices have risen nearly 27 cents amid the intensifying conflict in Ukraine over the past week, with the highest prices in California, Oregon and Washington, where people are paying average gas prices of $5.07, $4.28 and $4.22, respectively.
The overnight spike comes after Russian troops attacked Ukraine’s Zaporizhzhia Nuclear Power Plant, the second-largest nuclear plant in Europe—intensifying concerns that new sanctions could curb oil production in Russia, one of the world’s top oil-producing countries.
Oil prices spiked immediately after the attack, with U.S. benchmark West Texas Intermediate jumping 5% to a nearly eight-year high of $113 per barrel by 11 a.m. EST on Friday.
On Thursday, AAA fuel analysts warned that Russia’s invasion of Ukraine should keep pushing prices higher, advising most motorists to start budgeting for prices of $4 a gallon in the coming weeks, while Patrick De Haan, head of petroleum analysis at fuel-savings app GasBuddy, told USA Today some large cities could see prices of $5 per gallon.
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.
Surprising Fact
Gas prices last hit a nationwide average of $4 per gallon during the Great Recession in 2008, according to AAA.
Crucial Quote
“Russia’s invasion and the responding escalating series of financial sanctions by the U.S. and its allies have given the global oil market the jitters,” AAA spokesperson Andrew Gross said in a statement this week. “Like the U.S. stock market, the oil market responds poorly to volatility. It’s an explosive situation, and a grim reminder that events on the far side of the globe can have a ripple effect for American consumers.”
Key Background
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 is down 9% this year. Meanwhile, oil prices have surged nearly 24% over the past week—all in spite of efforts to curb the price surge. On Tuesday, 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.
Further Reading
Will Attempts To 'Self-Sanction' Russia Be Enough To Tame Putin Without Oil-Mageddon? (Forbes)
Oil Prices Hit New Seven-Year High At $105 Per Barrel As Russian Assault On Kyiv Sparks Supply Fears (Forbes)
