U.S. Average Gas Price Rises to $4.56 per Gallon, Highest in Four Years

The national average price for a gallon of regular gasoline reached $4.56 on Wednesday, the highest level in four years, after climbing 31 cents in the past week alone. One California county has seen prices hit $7.28 per gallon while the statewide average stands above $6.

The surge follows the effective closure of the Strait of Hormuz, through which a fifth of the world's crude oil normally passes, after the outbreak of war with Iran.

The price of a gallon of regular gasoline climbed 31 cents in the past week to an average of $4.48 earlier in the week before reaching the new high, according to AAA data reported across multiple outlets. Crude oil prices have climbed for most of the past two months because oil tankers have been stranded and unable to deliver through the strait.

The International Energy Agency described the closure as the largest supply disruption in the history of oil markets, pushing oil prices as high as $112 a barrel in early April. The last planned shipment from the Middle East, the tanker New Corolla carrying about 2 million barrels of crude oil from Iraq, arrived in Long Beach, California this week after departing before the conflict began.

The California Energy Commission vice-chair told legislators that the state can meet fuel demand for the next six weeks with its current supply but will need to find new sources to replace the one-third of its oil that has come from the Gulf. California imports significantly more of its oil supply from abroad than other states.

Optimism faded as the war continued and prices reversed course. "After the announcement of the initial ceasefire, there was kind of optimism that this really could be the beginning of the end of the conflict," Rob Smith, director of global fuel retail at S&P Global Energy, said.

" Smith added that a fundamental shortfall will drive up prices every day the strait remains constrained. "There’s a fundamental shortfall that will exist globally or fundamental struggle to meet that demand that will drive up price," he said.

Gas prices above $6 per gallon are displayed at Chevron and Shell stations in Monterey Park, California, on 30 April. The state has the highest gas prices in the U.S. and the current supply has been buffered by tankers already at sea when the strait closed.

"The war in Iran and the closing of the strait of Hormuz has actually been buffered by the fact that all of these tankers were at sea at the time that the strait of Hormuz closed," Michael Ross, a professor at the University of California, Los Angeles, told ABC7.

"This is the last shipment of that supply that was keeping prices relatively stable. " The American Automobile Association reported the national average had reached $4.54 earlier in the week while California stood at $6.16. Prices are at their highest level in nearly four years.

Federal and state taxes contribute about 17 percent, refining costs and profits 14 percent, and distribution and marketing 17 percent. In California, higher taxes and refining costs push prices well above the national average. One event that added pressure occurred in April when the U.S. blocked Iranian ports, further tightening global supply.

Bob Kleinberg, adjunct senior research scholar at the Columbia University Center on Global Energy Policy, said the oil market is exquisitely sensitive to developments. The longer the flow of oil is constrained through the Strait of Hormuz, the higher prices will go and the longer it will take to return to normal, according to analysts cited in the coverage.

A gallon of regular gasoline in the U.S. now costs more than it did in early May of 2022, when prices continued climbing through Memorial Day. Even a lasting resolution would leave a risk premium for shippers and insurance companies, extending the period of elevated prices.