Will Gas Hit $5 a Gallon Soon? Prices Soar Due to Iran War
Gas prices in the United States have experienced a significant surge of 61.8 cents in the past month, a sharp increase attributed to the impact of the Iran war on oil and gas markets globally. This surge has led to the state average crossing the $5 mark in California, where drivers are now facing prices of $5.29 per gallon, an increase of nearly 80 cents compared to a month ago, as reported by AAA data. The question on everyone’s mind is whether the national average could once again exceed $5, as it briefly did back in June 2022 during the early stages of the conflict between Russia and Ukraine.
According to Rapidan Energy Group, approximately 20% of the global oil supply is currently disrupted at the Strait of Hormuz. This disruption, coupled with a 32% increase in crude oil prices over the past month, has contributed to the rise in gas prices in the U.S. Crude oil accounts for about 47% of what drivers pay for gas in the country, making it a key factor in the recent price hikes.
Oil prices reached a peak above $110 on Monday before falling later in the day following President Donald Trump’s statement to CBS News that the war was “very complete.” As of press time on Tuesday morning, Brent crude, the global oil benchmark, was trading around $91 per barrel.
Independent oil analyst Tom Kloza described the current price hikes as “parabolic,” making it challenging to put into words. He predicted that the national average could approach $4 per gallon within the next 72 hours if current wholesale prices remain stable.
Gas prices are expected to continue rising this week, with the latest surge in oil prices surpassing $100 per barrel for the first time in four years. Kloza suggested that western states like Washington and Hawaii could soon join California in the $5 gas club. As of Tuesday morning, the only other states with gas prices above $4 were Nevada and Oregon, according to AAA.
The national average currently stands at $3.54 per gallon, up from $2.92 a month ago. GasBuddy anticipates that prices in many states could increase by 20 to 50 cents this week due to the heightened volatility in global oil markets.
While $5 gas during the Iran war is a possibility, it is not guaranteed. Kloza highlighted the potential for prices to reach $125 to $160 per barrel in a worst-case scenario, which could push gas prices towards the $5 mark if sustained.
In light of the soaring gas prices, South Korea recently announced the implementation of a fuel price cap, a measure not seen in the country for nearly three decades. This move has raised questions about whether the U.S. could consider similar measures to control rising gas prices.
President Trump is reportedly exploring various options to stabilize oil prices, including potential releases from strategic reserves and easing sanctions on oil-producing countries like Russia. While gas price controls have not been actively discussed in the U.S. in recent years, the current situation may prompt policymakers to consider new strategies to mitigate the impact of escalating gas prices on consumers.
