Gas prices in the U.S. have hit a new record, with two new states joining the $5 per gallon club. The national average gas price jumped to $4.87 per gallon on Monday, up by 25 cents over the past seven days.
The American Automobile Association said there are now 10 states where the average price of a gallon of gasoline is higher than $5. Michigan and Indiana joined the $5 per gallon club on Monday. States such as Massachusetts, New Jersey, and Pennsylvania are expected to hit $5 or more per gallon in the coming days. So far, the state with the lowest gas price in Georgia, where the average is still below $4.30 per gallon.
More than one out of every five gas stations in the United States now charges more than $5 a gallon for regular fuel, with just over half costing $4.75 or more. Analysts expect gas prices to continue to rise in the coming weeks, with some forecasting that the national average may reach $5.05 a gallon in the next 10 days, even with OPEC+ announcing that it would be increasing its output.
A number of factors have pushed gas prices to new highs, including increased demand for energy as people drive and fly more following the reopening of global economies. On the other side, supply has fallen behind. The U.S. is pumping less oil than it was before Covid-19, and the market believes OPEC+'s output increase commitments may be too little, too late. On Monday, US crude hit a new three-month high of $120.99 a barrel before recovering slightly.
The increased gas prices have translated to increased costs for consumers, from workers driving to and from work to uber drivers, who now earn less because of the increased expense. Some trucking companies have also begun to shut down their operations as they can no longer justify making deliveries because of the high prices.
The national average gas price initially hit a record of $4.11 per gallon for regular fuel in early March, which had stayed below $4 per gallon since 2008. That price now seems like a distant memory. For the previous month, the national average price has been rapidly climbing, breaking 27 records in the last 28 days.
Economists said the U.S. economy has remained resilient despite the ongoing geopolitical turmoil, with the Federal Reserve maintaining control of inflation thus far. However, economists warned that further rise in oil prices could jeopardize those efforts. They predict that if oil prices go to $150 per barrel, the country will definitely go into recession.
