“Can’t do much right now… Russia is responsible… This is a step that we’re taking to inflict further pain on Putin, but there will be costs as well here in the United States,” said President Joe Biden about the rising gas prices in America.
The average gas price in the United States hit a new high at $4.33 per gallon on March 11. The prices have stayed high with the national average at $4.15 on April 7th. These record-high prices resulted from extreme volatility in the energy market due to the ongoing war in Ukraine. That rate is over 48% higher than it was a year ago.
Since the Russian invasion of Ukraine, the price of gas, on average, has increased daily. The cost of gas is based on the cost of crude oil. The price of crude oil has been increasing since the U.S. and other Western countries have banned the import of Russian oil, liquified natural gas and coal. In 2020, Russia was responsible for ~7% of American oil imports. Some economists predict the oil price per barrel will rise to $150 a gallon. That would result in an average cost of $5 per gallon in the U.S. The reality is the average American consumer will feel the consequences of the war in their wallet until the market adjusts.
These gas prices have broken a record set in 2008 and stirred fears of a similar economic recession occurring in America. The higher gas prices have led to states taking measures to lessen the effect on consumers and prevent a crippling recession. Some states have used a pandemic budget surplus to offset the cost meanwhile others, like Maryland, have removed their gas tax.
California has been hit the hardest by rising gas prices with an average cost of $5.91. The average cost in California is nearly 70 cents higher than Nevada, the next highest state. Missouri has the lowest price of gas per gallon in the U.S. at $3.75.
The current gas price is a part of a recent downtrend in the average price across Kansas and Missouri. AAA says that the trend of lower prices resulted from lower demand for gas in Missouri and Kansas. The high prices have forced people to decide if an extra trip is worth the high cost and most have said no.
“The gasoline that we pump today actually reflects the price of crude [oil] that refineries purchased weeks ago,” explained Kelly Sanders, Associate Professor at the University of Southern California.
The unfortunate reality of the gas crisis is that there is a delayed reaction for consumers. The price of gas today represents the price of oil several weeks ago. So as the U.S. and the West take steps to lower the cost of oil, it will be even longer until your local gas station reflects that effort.