Gas prices in the United States have reached a record high. According to AAA, or the American Automobile Association, Americans are spending an average of $4.173 a gallon on gas, a rise of approximately 72 cents from only a month ago.

The previous record, established in July 2008, was $4.10 per gallon. Accounting for inflation, it would be roughly $5.37 in 2022.

According to the AAA data, gas prices rose 10 cents in a single day and 55 cents in a week. Prices have risen after President Joe Biden imposed a ban on all Russian oil and gas imports in line with his administration’s attempts to hold Russia responsible for its unlawful attack on Ukraine.

The Rise of Energy Costs

Energy costs are leading to the highest inflation rate in 40 years in the United States, greatly surpassing income growth. Consumer prices increased 7.5% year on year in January, and economists estimate a 7.9% growth when the government releases February statistics later this week.

Oil prices spiked early Monday before falling. The cost of the benchmark US oil rose above $130 per barrel overnight, then fell to roughly $119, a 3% increase, in afternoon trade. The international price soared to $139 a barrel before sliding down at around $123 a barrel. The S&P 500 fell 3%, the most in 16 months, as investors fled the country.

However, the Energy Department anticipated this barely a month ago, stating that oil would average approximately $80 per barrel this year. That was before Russia began its invasion of Ukraine on February 24.

Back at the Congress

As a bipartisan committee of House legislators worked to finalize legislation to enforce an embargo on Russian crude oil, the White House raised deep concerns. According to sources, the administration was cautious of allowing Congress to take the lead on establishing a ban.

The voting on the House bill, sponsored by California Speaker Nancy Pelosi, was postponed until late Tuesday.

Conclusion

The president and his advisers have explored several steps to limit the effects of the prohibition, including the release of extra strategic oil reserves. Last Monday, the US pledged to release 30 million barrels of crude oil, joining 30 other countries in a cumulative release totaling 60 million barrels.

Any oil imported by the US to substitute the Russian oil will be from an already overwhelmed global market. Until Russia finds new buyers, the supply shortage will keep prices raised.