Due to supply concerns connected to Russia’s Ukraine invasion, gasoline prices rose to their highest level since 2008 on Sunday.
According to AAA, the national average for a gallon of gas touched $4.009, the most since July 2008 (not adjusted for inflation).
Over the past week, consumers paid 40 cents more per gallon and 57 cents more a month ago.
Some consumers are paying significantly more in some regions, with the current average price in California at $5.288 per gallon.
The price increased following a spike in oil prices during Russia’s war in Ukraine. Oil accounts for more than half of the cost of gas people put in their cars, and U.S. oil is trading at levels not seen since 2008.
As a critical oil and gas producer and exporter, Russia has been unaffected by Western sanctions. However, the market is self-sanctioning, and buyers are avoiding Russian products.
JPMorgan estimates that 66% of Russian oil is struggling to find buyers, creating supply issues in a market that was already tight before Russia’s invasion.
As supply disruptions ripple through the energy complex, Andy Lipow, president of Lipow Oil Associates, said $4.50 per gallon is the next stop for the national average.
“Oil buyers are reducing their purchases of refined products from Russia, causing Russian refineries to shut down,” he said. “Dockworkers are refusing to unload vessels carrying oil and gas. Insurance rates are skyrocketing, causing vessel owners to cancel ship bookings loading in Russia, and this is also impacting on the ability of Kazakhstan to sell their oil.”
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