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Gas prices surge overnight — biggest jump since Hurricane Katrina

<i>Scott Olson/Getty Images</i><br/>Gas prices are displayed on a sign at a gas station on March 3 in Hampshire
Getty Images
Scott Olson/Getty Images
Gas prices are displayed on a sign at a gas station on March 3 in Hampshire

By Chris Isidore, CNN Business

US gas prices are surging at pace drivers haven’t seen since Hurricane Katrina in 2005.

The national average price for a gallon of regular gas stood at $3.84 a gallon Friday, according to AAA. That is the highest price since September 2012 and 11 cents higher than Thursday.

Gas prices have soared 18 cents since Wednesday and 29 cents since Russia’s invasion of Ukraine eight days ago. Each of those increases marks the largest price hikes since Hurricane Katrina slammed into the US Gulf Coast in 2005, devastating the nation’s oil and gas industry, according to the Oil Price Information Service, which collects data from 140,000 gas stations nationwide for AAA’s price averages.

With prices rising so rapidly, a national average of $4 a gallon, as well as the record $4.11 set in 2008, will probably be reached soon.

“This is not the end of it. We’re already up another 14 cents on wholesale gas prices this morning,” said Tom Kloza, global head of energy analysis for OPIS. He said the wholesale gas price increases are likely to be passed onto consumers in short order.

“It’s absolutely out of control,” he said.

The average price a year ago was $2.75 a gallon, as prices were still recovering from the plunge that occurred early in the pandemic. Stay-at-home orders and business shutdowns slashed demand for gasoline.

The average household uses about 90 gallons a month, said Kloza, so a $1.09 increase in gas prices costs that household about $98 a month, or just less than $1,200 over the course of a year.

Kloza said he could see the average price rising to a new record of between $4.25 to $4.50 a gallon. He said the rapid rise in the price of gas is making a particularly strong impression on the public, compared to a slow but steady increase in prices.

“When you get increases this quick, and this dramatic, you really scald the public,” he said.

California’s statewide average jumped 13 cents overnight to $5.07 a gallon, making it the first state ever to have a average price above $5 a gallon.

There are now nine states — California, Hawaii, Nevada, Oregon, Washington, Alaska, Illinois, New York and Pennsylvania, where the average price is already over $4 a gallon, with New York and Pennsylvania crossing the $4 mark with the latest reading.

Two more states — Arizona and Connecticut, as well as Washington, DC, are only pennies away from that $4 average.

The average price of a gallon of diesel is now $4.26 a gallon. It hit $4 this past weekend. While relatively few US passenger cars use diesel, virtually all large trucks depend on it. And most trucking companies have a schedule of fuel surcharges that are based on average prices, meaning that the cost of transporting almost all goods is increasing for businesses, a cost increase that is also likely to be passed onto consumers in the form of higher prices.

The sanctions placed on Russia’s economy following its invasion of Ukraine have so far exempted Russian oil exports. But traders have been reluctant to purchase Russian oil due to uncertainty about being able to close the transaction with the limits on the Russian banking sector, as well as concerns about finding oil tankers willing to to call on Russian ports to load any oil purchased.

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