Gas Prices Have Shot Up to Highest in 4 Months, But Experts Say Don’t Panic

Gas prices are on a rapid rise this year and we haven’t even got to spring yet, as reported by CNN.

According to AAA, following the low in mid-January of $3.07, the national average shot up to $3.40 a gallon on Friday. That’s a four-month high.

The fast pace at which gas prices have been rising poses a threat to undoing the progress on inflation and turns up the heat on the financial pressures for consumers across the nation. If this pattern continues or even speeds up further, it’s likely to cause major issues for the Federal Reserve’s tentative plan to start cutting interest rates in the months to come.

However, experts say there is no reason to panic about gas prices just yet.

It is common for gas prices to rise around this time of the year due to increased demand at the end of winter as the weather warms up. In addition, it means the end of the cheap winter fuel and the transition to the more pricey summer fuel combination, which is a process that has just started in many states across the U.S.

According to Bespoke Investment Group, since 2005, there have only been three years when prices dropped during this time of the year, with one of those years being 2020, when COVID-19 started to threaten the economy across the globe.

Paul Hickey from Bespoke’s states that the year-to-date increase in gas prices through March 7 was just 9.2%, which is only slightly ahead of the historical average of 8.3%.

In a report, Hickey wrote that “given that history,” this year’s rise “doesn’t seem so extreme or worrying.”

Speaking to CNN, Hickey said it would take a “much larger” spike in prices before it altered the Fed’s plans. He added, “There’s a lot of room left before this type of move would be considered anything outside of normal.”

The latest surge in late-winter prices has been fueled by refinery disruptions. Severe cold weather in January caused several refineries to temporarily close down, restricting the supply of gasoline, diesel, and jet fuel available to consumers.