- The price of gas reached a record-high $4.196 per gallon, according to US government data.
- Some analysts have predicted prices as high as $5.84 if crude oil hits $200 per barrel.
- The last time prices were this high, average US households spent 4% of their income on gas.
Gas prices have never been this high, and it's going to get worse before it gets better.
The latest numbers from the US Energy Information Administration put the average price of a gallon of gas at $4.196 on Monday — three cents higher than the July 2008 record of $4.165.
The run-up is also one of the fastest that US drivers have ever experienced.
"That combination makes this situation all the more remarkable and intense, with crippling sanctions on Russia curbing their flow of oil, leading to the massive spike in the price of all fuels: gasoline, diesel, jet fuel and more," GasBuddy head of petroleum analysis Patrick De Haan said in a statement.
"The high prices are likely to stick around for not days or weeks, like they did in 2008, but months," he added.
The price of gas is closely tied to the price of crude oil, which spiked to $130 per barrel on Tuesday ahead of news that the Biden administration would ban imports of Russian oil in retaliation for that country's invasion of Ukraine.
If Europe were to follow suit, that oil price could surge to $200 a barrel, Rystad Energy consultants warned.
Moody's chief economist Mark Zandi projected a lower peak as the point where the high price curbs demand and slows the climb.
"For oil demand and supply to equate, oil prices as high as $150 per barrel seem increasingly likely," Zandi said.
In either case, those oil prices would lead to gas prices of more than $5 per gallon. Here's why:
Under normal circumstances, crude oil contributes between 50% and 70% of the price of gasoline, so if you divide oil's price by 42 (the number of gallons in a barrel), you get the first part of the baseline cost of gas.
That means a gallon of gas made from $130 barrel oil will have a raw material cost of $3.09 — and that's just the beginning. Refining, transportation, and taxes all have to be added in before the gas is sold, and those expenses can nearly match the cost of the oil itself, according to the American Petroleum Institute.
Using the conservative estimate of 70% for raw material costs, the price of oil being traded this week could result in $4.41 at the pump in the coming days.
Analysts cited by NPR project that if oil hits $200, the retail price of gas would average $5.84 in the US.
The last time gas prices were steadily in the neighborhood of $4 was in 2012, and research by the St. Louis Federal Reserve estimated that Americans spent 4% of their income on gas — one of the highest levels in 30 years.
If prices remain elevated for weeks or months in the future US drivers could be looking at a similar hit to their bank accounts.