From truckers to commuters, gasoline prices are squeezing budgets across the country. And the pain at the pump will not let up anytime soon.
With peace talks between the United States and Iran appearing deadlocked, the average cost for a gallon of regular gasoline rose to $4.18 – its highest level in four years according to AAA.
The last time Americans paid this much to fill their tanks was after Russia’s invasion of Ukraine.
Gasbuddy petroleum analyst Patrick De Haan had a sobering forecast for Americans. The national average could tick up to $4.20 on Tuesday and could soon reach $4.30 a gallon, he told USA TODAY.
Why Prices Keep Climbing
The problem? Oil prices are on a steady upward march as peace negotiators indicated an impasse in negotiations to reopen the Strait of Hormuz.
Brent crude, the international benchmark for oil, is more than 40% higher than before the Iran war began in February.
Restrictions on tanker traffic in this narrow passageway are largely to blame for levitating oil prices and the other economic reverberations being felt around the globe. On an average day, some 20% of oil used to move through the strait that the war choked off.
Oil could trade even higher, investment bank Goldman Sachs said this week. The bank’s commodities analysts raised their forecast for Brent crude for the fourth quarter to $90 from $80.
The price of Brent crude popped 4%, to above $105 a barrel before slipping back to $104 after the United Arab Emirates said it would leave OPEC next month.
The Ripple Effect on Your Budget
And the ripple effect is spreading to budgets across the country, especially in states like California that boast nosebleed gas prices and in Midwest states suffering from refinery issues.
Despite the toll of higher energy prices, consumer confidence rose slightly in April. The Conference Board’s gauge that measures consumer confidence inched up the last two months but remains near its lowest level since the COVID-19 pandemic.
As Americans cinch their budgets, businesses are getting afterburn.
Even Domino’s is hurting as Americans order less pizza. The pizza chain reported slower-than-expected sales growth this week.
On the flip side, British petroleum giant BP’s profit more than doubled in the first quarter.
Contributing: Andrea Riquier. Reporting by Jessica Guynn, USA TODAY.
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