Natural gas prices have risen nearly $0.50 a gallon over the past week and could rise to $4 a gallon in the coming weeks as tanker shipments through the Strait of Hormuz have all but stopped.
Oil prices (CL=F) topped $110 a barrel on Sunday night as traffic came to a standstill on the main shipping route that normally handles a fifth of global oil supplies due to threats of strikes from Iran.
For every $10 increase in crude oil prices, Americans pay $0.25 more for gas.
“I believe there is about an 80% chance that the national average gas price will hit $4 a gallon within the next month or less,” GasBuddy Patrick De Haan wrote Sunday night. “In the short term, the national average of $3.45 per gallon could climb to about $3.75 to $3.95 this week alone.”
Read more: How the oil price shock hits your wallet (from gas to groceries)
If prices exceed $4 per gallon, it would mark the first time since August 2022 that Americans have faced such staggering prices at the pump. A week ago, the national average price was $2.99 per gallon; now it’s $3.47, according to AAA.
Against this backdrop of rapid growth, Americans are spending an average of $187 million more at the pump every day than they were last week.
Diesel costs are rising even faster. De Haan believes there is an 85% chance that diesel costs nationwide could hit $5 a gallon this week for the first time since December 7, 2022.
The national average diesel price is now $4.66, up from $3.77 a week ago, which has wider implications for consumers. As the conflict continues, the rising cost of transporting goods has pushed up prices in stores for Americans.
This will affect everything from groceries to clothing to construction materials, much of which is shipped via freight in the United States.
Now, a potential energy crisis has stoked fears of stagflation on Wall Street as oil prices soared and labor data from the Bureau of Labor Statistics came in worse than expected.
“Concerns about stagflation are growing in the United States,” JPMorgan analysts wrote in a note to clients on Monday.
Nigel Green, chief executive of deVere Group, also noted that this “toxic combination” of rising inflation and slowing economic growth was a “very real possibility”.
“Oil is the ignition point,” Green wrote. “Energy prices are soaring so fast that inflation is accelerating almost everywhere. Businesses face higher costs, households face higher bills, and growth is simultaneously squeezed.”