Gas prices back at $4 a gallon
By Chris Isidore, CNN
(CNN) — The average price US drivers pay for gas hit $4 a gallon on Monday, only the second time it has reached that benchmark since the war in Iran disrupted global oil supplies.
The average price is now at $4 a gallon, according to the American Automobile Association (AAA). Gas first crossed the $4 mark on March 31, a month into the conflict.
The average national price for a gallon of regular gas was $2.98 before the fighting began and cut off most oil flowing through the critical Strait of Hormuz.
Prices rose to a four-year high of $4.56 in early May before falling on hopes that negotiations between Iran and the United States would reopen the waterway and release oil tankers that had been trapped in the Persian Gulf.
The two countries signed a memorandum of understanding on June 14 to halt hostilities, prompting gas to fall back below $4 a few days later.
But prices at the pump began to climb again after Iran resumed attacks on ships trying to exit the strait and after the US retaliated and put a blockade on Iranian ports. The average price is up around 13 cents over the past week.
About half of America’s states still have an average price below $4 a gallon, however. Indiana has the lowest average price at $3.35 a gallon, while California is the most expensive at $5.49. Washington state and Hawaii also have an average price above $5 a gallon, according to the AAA.
Gas prices are not expected to decline anytime soon, according to Tom Kloza, an independent oil analyst and advisor to Gulf Oil. The recent run-up in gasoline futures indicates prices will rise another 10 to 25 cents over the next week.
“That’s baked in,” he said.
The war with Iran and renewed closure of the strait aren’t the only factors driving prices higher. There’s also Ukraine’s recent drone attacks on Russian refineries, Kloza said.
“Russia has had to import gasoline, whereas they’ve been a net seller for many, many years,” he said. “It has raised fears in markets of a refined product shortage. And no matter how much gasoline we make here, it is a global market.”
All of this comes amid peak driving season in the United States, where demand for gas is at a maximum, Kloza said. Stronger demand is expected to keep upward pressure on gas prices through Labor Day.
The-CNN-Wire
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