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Gas prices hit all-time highs with no immediate relief in sight

The average price of a gallon of gasoline now stands at $4.37, surpassing the previous record high set March 11, according to AAA.
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After a brief lull, gas prices are climbing again and have returned to all-time highs.

The average price of a gallon of gasoline now stands at $4.37, surpassing the previous record high set March 11, according to the American Automobile Association. Drivers in Michigan, Ohio and New Jersey, where gas prices have increased by between 19 and 30 cents a gallon in just one week as of Sunday, have felt the most pain.

The price surge is tied directly to rising oil prices, which hovered around $100 on Tuesday.

“With the cost of oil accounting for more than half of the pump price, more expensive oil means more expensive gasoline,” AAA spokesperson Andrew Gross said in a statement. “These prices are creeping closer to those record high levels of early March.”

The oil price spikes, in turn, are being driven by the war in Ukraine and Western sanctions against Russia, according to GasBuddy, which tracks the cost of fuel throughout the country.

Prices could go even higher from here as the summer driving season approaches, Gross said.

"Russia’s oil increasingly remains out of the market, crimping supply while demand rebounds ahead of the summer driving season," Patrick De Haan, head of petroleum analysis at GasBuddy, said in a statement.

"There’s little, if any, good news about fuel prices heading into summer," he continued, "and the problem could become worse should we see an above average hurricane season, which could knock out refinery capacity at a time we badly need it as refined product inventories continue to plummet."

A woman pumps gas into her car
A woman pumps gas into her car at a station in Wantagh, N.Y., on April 5.Steve Pfost / Newsday RM via Getty Images file

A further contributing factor: Domestic production has stalled, as oil companies have sought to return more money to investors after taking on heavy losses during the pandemic. That's become a political flashpoint, with Democrats calling a hearing and accusing oil companies of sitting on their hands.

Chevron CEO Michael Wirth responded that oil is a global market.

"We do not control the market price of crude oil or natural gas, nor of refined products like gasoline and diesel fuel, and we have no tolerance for price gouging," he said during a congressional hearing in April.

Rising prices are likely to increase pressure on the Biden administration to act, even as it seeks to address long-standing climate goals. In April, President Joe Biden announced plans to boost the production and sale of ethanol-blended gasoline to help ease rising prices. Biden is scheduled to speak later Tuesday to address inflation.

The Bureau of Labor Statistics is set to announce the latest inflation data Wednesday. The current gas price surge will not be reflected, though it could show up in next month's readings.

CORRECTION (May 10, 2022, 3:55 p.m. ET): A previous version of this article stated oil prices were closing in on a post-Great Recession high of $110 per barrel. The most recent high oil price was $123.70 in March.