TLDR
- Gas prices increased by nearly $0.50 last week, reaching a national average of $3.48 per gallon
- Oil prices crossed $110 per barrel as tanker traffic through the Strait of Hormuz almost came to a standstill
- A GasBuddy analyst gives an 80% probability that gas will reach $4 per gallon within a month
- Diesel is already at $4.66 per gallon, up from $3.77 just one week ago
- Wall Street is raising concerns about stagflation as energy prices spike and labor data weakens
Gas prices in the United States have risen significantly over the past week due to the war in the Middle East disrupting global oil supply. The national average reached $3.48 per gallon on Monday, up from $2.99 just one week earlier.
This represents a nearly 17% increase since the U.S.-Israeli attacks on Iran began on February 28.
Oil prices crossed $110 per barrel on Sunday evening. The increase occurred after tanker traffic through the Strait of Hormuz nearly halted. This waterway typically transports about one-fifth of the world’s oil supply.
Iran stated that it was launching more missiles towards Israel in response to what it described as escalating U.S.-Israeli attacks. The conflict is now in its tenth day.
GasBuddy analyst Patrick De Haan said on Sunday that he believes there is approximately an 80% chance the national average will reach $4 per gallon within the next month. He also added that prices could increase to between $3.75 and $3.95 within just this week.
The last time Americans paid $4 per gallon was in August 2022.
For every $10 increase in crude prices, Americans pay about $0.25 more at the pump. With oil now above $100, this calculation is adding up rapidly.
Overall, Americans are currently spending around $187 million more per day on gas than they did a week ago.
Diesel Costs Climbing Even Faster
Diesel prices are rising more quickly than regular gasoline. The national average for diesel was $4.66 per gallon on Monday, up from $3.77 the previous week.
De Haan placed the probability of diesel reaching $5 per gallon nationally at 85%, potentially this week. This would be the first time since December 7, 2022.
Higher diesel prices have implications beyond drivers. Most goods in the U.S. are transported by freight trucks. When diesel costs more, shipping costs increase, and these costs are passed on to consumers in the form of higher prices at the store.
This means that groceries, clothing, and construction materials could all become more expensive.
Stagflation Fears Grow on Wall Street
Rising energy costs are fueling broader economic concerns. Analysts wrote in a note to clients on Monday that “concerns about stagflation are increasing in the U.S.”
Stagflation refers to a combination of high inflation and slow economic growth. Nigel Green, CEO of deVere Group, called this a “toxic combination” and a “very real possibility.”
Green wrote that when energy prices surge this rapidly, inflation accelerates across the board. Businesses face higher costs, households pay more for bills, and economic growth slows simultaneously.
Prices vary by state. As of Saturday, California drivers were paying $5.20 per gallon, the highest in the country. Kansas drivers paid $2.92, the lowest.
