The current average price for a gallon of regular gas in the United States is $3.13, according to the AAA. A year ago, the price was $2.18. The price is even higher in some places. The figure has topped $4 in California and is almost to that mark in Hawaii.
There is a real concern that crude oil prices, which have nearly doubled in the past seven months to over $70 a barrel, will move to $100 within a few months. That $100 level has been topped twice recently, in 2008 and 2014. When oil prices moved above $100 a barrel in 2008, and actually traded slightly above $150, gas prices reached an all-time high. On July 17, 2008, the figure hit $4.114 a gallon. The open question for Americans who drive a great deal is will $100 oil return and trigger $4 gas?
The effects of $4 gas on the economy would be crippling. Some people commute 20 miles or more to work each day. What they pay could essentially double in less than two years. This is compounded by the fact that many Americans drive crossovers, sport utility vehicles and pickups now. These tend to get lower gas mileage than the sedans Americans drove a decade ago. The people who will dodge this problem, at least in part, are those who drive hybrids, and the modest number who drive electric cars.
The American economy has made an extraordinary recovery from the COVID-19 pandemic. Gross domestic product could rise over 7% in some quarters this year. Interest rates will remain low, which will make cars and houses relatively less expensive than in most years in the past decade. Gas prices at $4 could derail some of that progress.