The national average gas price surpassed its pandemic-era peak to mark a new high since 2014. Few analysts see relief coming any time soon.
The average cost of a gallon of regular unleaded gasoline rose nearly 6 cents this week to $3.423, the highest since August 2014, according to AAA. As the chart below shows, prices had fallen late last year after the World Health Organization declared omicron a “variant of concern,” but have now more than returned.
The increase is in line with a jump in oil prices, which also touched the highest level since 2014 on Friday. Oil makes up about half the cost of a gallon of gas, and has been surging for a variety of reasons, including supply and demand imbalances and geopolitical tensions.
Oil demand has been soaring since COVID-19 vaccines rolled out last year, allowing economies to reopen and people to feel comfortable going out again and traveling. The Organization of the Petroleum Exporting Countries and certain other oil-producing nations (or OPEC+) have been slow to bring production back to pre-pandemic levels, so the supply of oil has not kept up with the increase in demand, and prices have surged as a result.
Meanwhile, Russia, one of the world’s three largest oil producers, has been building up its military presence along the Ukraine border. If western nations respond with sanctions, Russia could withhold crude oil supplies to the world market, which would send oil prices even higher, Andrew Gross, AAA spokesman said in a report.
“The oil market is too tight and vulnerable to any shock,” said Ed Moya, senior market analyst at OANDA, in a commentary. “The energy market is fixated over production and not so much short-term demand shocks.”
Correction - Feb. 8, 2022 - This story was corrected after misstating that Russia is the world's largest oil producer. It should have said Russia is one of the world's three largest oil producers. This story was originally published on Feb. 4, 2022.
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