Over $4 A Gallon: Gas Prices Surge To Highest Levels In Over A Decade

Gas prices in the U.S. have reached their highest levels since 2008 as the Russian war in Ukraine is being felt by Americans at the pump.

What Happened: On Sunday, the national average for a gallon of gas rose to $4.009, a level that hasn’t been seen since July 2008. Prices began rising as the Russian invasion of Ukraine began, climbing 40 cents higher in the past week, and are now over 57 cents above prices a month ago.

In California, gas prices have risen by 13 cents in a week, with some local gas stations charging as much as $6.95 for a gallon of regular. Those purchasing premium gas are paying as much $7.55 per gallon.

Meanwhile, on the East Coast, drivers were paying an average of $4.14 a gallon in New York on Sunday, a jump of about 34 cents over the past week. Premium gas, was selling for $4.58 a gallon, up 27 cent.

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Why It's Happening: Andy Lipow, president of Lipow Oil Associates, tells CNBC, “Oil buyers are reducing their purchases of refined products from Russia causing Russian refineries to shut down.”

According to estimates from JPMorgan, 66% of Russian oil is having a hard time finding buyers, which is impacting global oil supply, since Russia is the world’s second-largest oil exporter.

“As Russia’s war on Ukraine continues to evolve, and we head into a season where gas prices typically increase, Americans should prepare to pay more for gas than they ever have before.” Patrick De Haan, head of petroleum analysis for GasBuddy, said in a Saturday release. “This is a milestone that was hard to imagine happening so quickly, but with bipartisan support of severe sanctions on Russia, is not exactly surprising – it is the cost of choking off Russia from energy revenue.”

In order to address the oil shortage, U.S. Secretary of Energy Jennifer Granholm announced last week that “the United States and 30 other member countries, supported by the European Commission, agreed to collectively release an initial 60 million barrels of oil from strategic petroleum reserves.”

President Joe Biden has authorized an initial commitment on behalf of the United States of 30 million barrels of oil to be released from the Strategic Petroleum Reserve, Granholm said in a statement. “We stand prepared to take additional measures if conditions warrant.”

Photo: Courtesy of ekornblut on Flickr