Gas Prices Are Going Up — And Likely to Rise Even More

Gas prices are beginning to climb after hitting some of the lowest levels since 2021. Just last week gas prices were below $3 in 28 states — as of June 17 there were 18 states with gas prices at that level.

Last week, Israel launched an attack on Iran, targeting the latter’s largest city, Tehran, and its most critical oil and gas facilities. Following the attack, the price of Brent crude oil — the international oil commodities benchmark — rose nearly $10 to more than $76 per barrel. It has since receded somewhat, but it’s possible additional spikes are on the way.

Why are oil prices going up?

As the conflict between Israel and Iran intensifies, it’s likely that oil commodity prices will continue to rise worldwide and, in turn, increase consumer gas prices once existing inventories are depleted. Much depends on either government’s next moves.

JP Morgan Chase analysts warn that if there is a full-scale conflict, it could block the Strait of Hormuz — an oil corridor for about 20% of global crude oil. If it were blocked, it could send prices soaring to $120 or $130 per barrel, as it did following Russia’s invasion of Ukraine. So far the strait remains open and oil prices remain below high price levels seen earlier this year.

Gas price inflation, explained

It wasn’t that long ago that gas prices were soaring: Prices surged in 2021 and 2022, largely due to two economic disruptions: pandemic-related supply shocks and then Russia’s invasion of Ukraine. The combination of the two hit energy markets hard and prices never recovered to pre-pandemic levels.

Here’s what happened:

• In 2019, before the pandemic, the average per-gallon price of regular gas was $2.601,  according to EIA data.

• Following Russia’s invasion of Ukraine, the national average increased before peaking at $5.016 per gallon on June 14, 2022, according to AAA. 

• Since then, gas prices have retreated, but they haven’t returned to pre-pandemic levels. Today, gas prices are about 9% higher than they were six years ago. 

Why gas prices remain higher than they used to be

At this time of year, seasonal factors play a considerable role in raising gas prices. A scheduled switch to summer-blend gasoline temporarily elevates prices through the warm months. Inflation, supply-chain disruptions and gas tax hikes can factor into higher prices, as well. But in the end, elevated oil prices are the main culprit.

The cost of oil typically represents more than half of the cost of a gallon of gasoline, according to the U.S. Energy Information Administration (EIA). So, a major reason gas prices have remained so high is that, until recently, oil prices were higher than they were before the pandemic hit in 2020 and Russia invaded Ukraine in 2022. That’s based on the average monthly price of West Texas Intermediate crude, which is used as the benchmark for oil prices in North America.

Keep in mind that gas prices at the pump rarely reflect that day’s market conditions. Instead, they represent costs incurred weeks, even months before. That lag makes prices slower to rise and fall than news headlines might suggest. And while spot shortages, refinery production shortages or blending issues can drive up gas prices locally, big nationwide swings in gas prices are almost always due to the price of crude oil.

Gas prices were sliding for months

Gas prices began to drop steadily in the fall, and stayed relatively low through the winter. Seasonally, the direction of prices was expected. During the cooler months, consumer demand is lower and the blend of gasoline is cheaper to make. That tends to hold down prices until spring.

But price levels over the winter were the lowest we’d seen in awhile. In December, the national average nearly touched $3 per gallon for the first time since May 2021, according to AAA. (It’s worth noting that, in a competing analysis, GasBuddy says the national average was $2.89 in December.)

Even as prices started to tick up over the past month, they remained much lower than a year ago. Here’s how gas prices compare today:

• As of June 17, the average regular gas price in the U.S. is $3.167 per gallon, according to AAA, which tracks gas prices. 

• The price is up from $3.185 per gallon a month ago. 

• A year ago, the price was $3.446 per gallon.

At the moment, these are short-term trends happening within the larger picture of elevated gas prices. But experts said they could continue in 2025 — and the impact of President Donald Trump’s tariffs appears to make that even more likely. That’s because oil prices, though still higher than they were before the pandemic, have been trending down. A week after Trump’s tariff announcements, WTI crude prices were down 27% compared to July and 50% from their peak in 2022.

Average gas price per state

The average gas price per state varies widely, with the most expensive state typically costing about $2 more per gallon of regular than the least expensive state.