Gas Prices Up 60 Cents and Climbing
Gas prices have jumped 60 cents a gallon in less than three weeks. The national average is now $3.539, up from around $3.02 before the Iran war started on February 28. That's a 17% increase, and it's hitting people hard from coast to coast.
If you fill up a 15 gallon tank, that's an extra $9 every time you go to the pump. Do that once a week, and you're spending an extra $36 a month just to drive the same amount. For families living paycheck to paycheck, that $36 might be the difference between paying a bill on time or not.
But the pain isn't evenly distributed. In California, gas hit $5.20 a gallon in Los Angeles and San Francisco. Hawaii is at $4.95. Washington state sees $4.35. Even Texas, usually cheap at $2.80, jumped to $3.40. Alaska sits at $3.85 despite being an oil producing state.
And it's probably going to get worse. Analysts at GasBuddy predict $4 a gallon nationally by April if the war doesn't end. AAA expects $4.25 in California and $4.50 in Hawaii. Patrick De Haan, head of petroleum analysis at GasBuddy, warned of potential $4.50 national average if Iran fully closes the Strait.
The reason is simple. Oil is expensive, and gas is made from oil. When crude costs $100 a barrel instead of $78, refineries like Valero, Marathon, and Phillips 66 pay more to buy it. They pass that cost on to gas stations. Chevron, Shell, and ExxonMobil stations pass it on to you.
But there's another factor coming. Summer blend gasoline is about to hit the market. Refineries switch to a different formula in the warmer months to reduce smog. That summer blend costs about 15 cents more per gallon to produce. The Environmental Protection Agency requires it by May 1. Add that to the already high prices from expensive oil, and you're looking at serious pain at the pump.
People are already changing their behavior. Uber and Lyft drivers are working fewer hours because profits evaporate. Long distance truckers face fuel costs eating 40% of revenue. FedEx and UPS announced fuel surcharges. People are carpooling, combining errands, and driving less. AutoNation reported a 15% jump in fuel efficient car inquiries.
The economic ripple effects are big. When gas is expensive, people have less money to spend on other things. Restaurant traffic at Chipotle, McDonald's, and Starbucks dropped 8% in March. Retail sales at Target and Macy's slowed. Even Amazon reported weaker consumer spending.
For people who commute long distances to work, this is a crisis. Someone driving 50 miles each way from suburban areas to city jobs is spending hundreds of extra dollars monthly.
