That pain at the gas pump might just be hurting a little more soon.
The price of fuel is expected to move even higher from already record territory, due to the ongoing conflict in Ukraine and the onset of hurricane season in the U.S., analysts say.
In a note to clients, veteran oil markets expert Andy Lipow said he expects the average price of gasoline in the U.S. to hit above $5.00 per gallon this month as oil trades higher in anticipation of coming storms. The weather, he said, is likely to impact refining output and supplies along the U.S. Gulf Coast. According to AAA data on Friday, the average price is now about $4.98, though it is much higher in some states along the West Coast and the Midwest.
"The only question is when it will hit $5," Lipow wrote.
The main driver of gasoline prices is oil prices. Right now, many Western nations have suspended purchases of Russian oil in response to that country's invasion of Ukraine. Since Russian troops moved into Ukraine on Feb. 24, the price of one barrel of Brent crude oil has climbed from about $87 to about $122.60 at the market close on Thursday.
In that time, national average gasoline prices have skyrocketed from $3.54 a gallon to the $4.98 per gallon that drivers are seeing Friday.
"This war in Ukraine doesn’t look like it's going anywhere any time soon — it's entered a grinding phase," said AAA National Public Relations Manager Andrew Gross. "So sanctions are not going to go away. Our retaliation is not going to go away."
Demand is also up, especially in China, where a post-Covid lockdown reopening is underway.
"Their economic engine is going to start to rev up again," Gross said.
Although the Biden administration has released significant amounts of oil from the U.S. strategic petroleum reserve, global market forces have dampened the impact of that measure, Lipow said. Meanwhile, even as U.S. oil production trends higher, shortfalls in domestic refining capacity have limited its ability to affect global oil markets.
Another concern is diesel prices. While fewer U.S. drivers use diesel for their personal vehicles, they can expect to see higher prices of goods — meaning ongoing inflation — as the cost of the industrial fuels is passed on to consumers.
"Of particular concern is the price of diesel in the Los Angeles/Long Beach area of $6.90 which looks to be headed to $7," Lipow wrote. "It matters because 31 percent of all containerized international waterborne trade passes through these ports. These goods are then delivered to the consumer by truck and rail. Higher freight costs means higher costs of consumer goods."
Bottom line, Lipow said: There is no immediate end in sight to higher gasoline prices.
“The consumer should expect that high gasoline and diesel prices are here with us for a long time,” Lipow said in a follow-up interview. “And while this fall and winter gasoline prices may fall off a bit, a return to $3 gallon gas is quite unlikely.”