The Age Of $6 Gas

A gallon of gas, based on a nationwide regular, was $4.30 yesterday, according to AAA. A gallon of premium was $5.16. The price for regular in California was $6.01.

And since then, the price of Brent has risen to $126, more than double what it was at the start of 2026. That prices will start to be passed through to gas prices within weeks. The odds that a gallon of regular gas will cost $6 is rising quickly. 

Oil has reached a four-year high. It was at that level because of the disruption in crude shipments due to Russia’s invasion of Ukraine. The price came down quickly. The bottleneck created in the Strait of Hormuz could last for months. Oil futures traders are betting this is true.

The World Bank has signaled that energy prices will remain high throughout the year. According to their new Commodities Markets Outlook, “Energy prices are projected to surge by 24% this year to their highest level since Russia’s invasion of Ukraine in 2022, as the war in the Middle East sends a severe shock through global commodity markets.” 

The powerful effect of oil prices does not stop at gas prices. Jet fuel supply is so low that airlines in Asia are cutting flights. One estimate suggests Europe will run out of jet fuel in six weeks. Even US carriers, despite America’s oil production, have begun raising ticket prices and cutting routes just weeks before Memorial Day, a period of heavy car and air travel.

Home heating oil prices have already been affected. It will not occur as fast, but petrochemical prices will rise as well. These are used in cosmetics, safety glass, fertilizers, food preserves, medical plastics, and a wide range of other products.  ,

Overall, the effect on the US economy will be profound. When oil reached its current level four years ago, the CPI jumped to 9.1% year over year in June 2022. This was the highest level in over four decades. The Fed raised rates aggressively to curb inflation.

An extended period of high inflation is likely to damage the economy by cutting into discretionary spending. Discretionary spending is about two-thirds of GDP 

At the current pace of increase, gas will be at $6 before Memorial Day.