Gas... GAS... Gas is so cheap.. So cheap.... Not!

US gas prices are now at their highest level in 11 months

By Chris Isidore

Gas prices shot higher by another 5 cents a gallon in the latest reading from AAA, taking the average price in the US to $3.25 a gallon, the highest average price in 11 months.

This 26-cent-a-gallon increase since Friday is a reaction to the war in Iran and the effective closure of the Strait of Hormuz, a crucial channel through which 20% of the world’s oil passes. Gas prices have also risen after Iran launched retaliatory attacks on the oil facilities of its oil-rich neighbors, such as the United Arab Emirates, Qatar, Kuwait and Saudi Arabia, the world’s largest oil exporter.

Most of the increase has come in the last three days, although today’s 5-cent jump in prices is less than the 9-cent increase in Wednesday’s reading and the 11-cent spike in prices on Tuesday, which had been the biggest one-day increase since the aftermath of Hurricane Katrina in 2005.

Still, the 25-cent gain in gas prices in the last few days is the largest three-day rise since March 2022, shortly after sanctions were imposed on Russia for its invasion of Ukraine.

Diesel prices are rising even faster. The average price of diesel rose 12.8 cents to $4.17 a gallon in Thursday’s reading, taking it up 40 cents in just that last three days. While few American drivers have cars powered by diesel, the spike may be felt by the average consumer in coming weeks. Most heavy trucks use diesel, and most trucking companies have a fuel surcharge they add onto their rates. Fuel surcharges are also being put in place on ocean shipments. So, moving goods is becoming more expensive and could be passed onto consumers in higher prices.

High diesel prices could also hurt farmers, who use diesel in their farm equipment, just as they prepare for the spring planting season. And homeowners in the Northeast who use heating oil will be hurt since that is the same product as diesel.

And more prices hikes could be on the way. Wholesale gas prices, along with West Texas Intermediate oil and Brent Crude, the two benchmark readings for oil prices, were all slightly higher in early trading today.