American motorists are bracing for the highest gas prices in years, with a new forecast predicting an average of $4.80 per gallon between Memorial Day weekend and Labor Day.
The national average price for a gallon of gas was $4.56 on Wednesday, up more than $1.40 from last year, according to AAA. Gas prices could test their all-time high of $5.02 a gallon if the Strait of Hormuz remains closed late into the summer, says Patrick De Haan, a petroleum expert at GasBuddy.
Gas Price Forecast
The Middle East conflict is driving up global oil prices, with ship traffic through the Strait of Hormuz largely stalled due to the Iran war. This, combined with summer demand and U.S. environmental regulations requiring a more expensive blend of fuel, will push prices up.
Fuel costs typically rise during the summer, with the higher-grade fuel adding up to 15 cents per gallon to the cost of filling up, according to GasBuddy. Stronger demand for gas can also push prices up by 5 to 15 cents a gallon.
More than half of Americans say gas prices represent a financial hardship, while 77% say their income is not keeping up with rising inflation, according to a recent poll.
Impact on Consumers
Americans are expected to pay billions more to get where they’re going this summer, and even after the Strait of Hormuz reopens, it could take a year or more for prices to fully recover, says De Haan. The rising gas prices will have a significant impact on American households, particularly those with limited budgets.
The increased fuel costs will also affect the overall economy, as consumers may cut back on discretionary spending to cope with the higher gas prices, leading to a broader economic impact.
