The average price of a gallon of gas in America stands at $4.31 this morning, according to AAA. Yesterday, it was just 1 cent higher. Last Friday, it hit $4.33.
After rising by nearly 50 cents in just a week, it seems to have hit a plateau. Will it hold?
It’s hard to say. AAA spokesperson Andrew Gross explains, “This war is roiling an already tight global oil market and making it hard to determine if we are near a peak for pump prices, or if they keep grinding higher. It all depends on the direction of oil prices.”
Oil prices rose quickly after Russia invaded Ukraine but have since receded slightly. Crude oil futures hit a high of nearly $125 a barrel last week, as President Biden announced a ban on Russian oil imports. They have fallen since, sitting below $96 a barrel this morning.
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“Rockets and Feathers”
Gas prices haven’t fallen with oil prices. That’s not unusual. Within the oil industry, the phenomenon is known as “rockets and feathers” – prices go up as fast as a SpaceX Falcon 9, and drift down as slow as goose feathers in a gentle breeze.
“This has been going on for 40 years,” Andy Lipow, president of consulting firm Lipow Oil Associates, told CNN this morning. “Prices do dip. It just seems to take a long time.”
President Biden showed some frustration with the feathers this morning, tweeting that “Oil prices are decreasing, gas prices should too. Last time oil was $96 a barrel, gas was $3.62 a gallon. Now it’s $4.31. Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans.”
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A Complex Market
But uncertainty continues to shape markets. The New York Times reports that the price drop could be coming in response to Chinese actions. The country has imposed lockdowns to combat a new outbreak of COVID-19. China is the world’s largest oil importer. When Chinese citizens drive less, the world oil supply increases.
But that does nothing to stop the war.
For now, a short-term drop in gas prices seems likely. Patrick De Haan, head of petroleum analysis at GasBuddy, says, “It’s only time before we sink back under $4/gal average as long as these levels hold.”
Longer-term, as long as the situation in Europe remains unstable, prices are likely to stay in flux.
