"Some calculations put the difference between gas at $2.95 a gallon (where it was recently nationwide) and gas at $5 at as much as $2,000 a year. Others put it closer to $3,000. The median after-tax income in the US is $65,000, so gas prices are a challenge for many people, particularly when they reach 4% of their annual budgets."
"$5 gas seems impossible because gas prices have dropped slowly and steadily for two years, to under $3 per gallon of regular nationwide. However, the Russian invasion of Ukraine shows how fast a jump can happen. Crude oil prices topped $100 in early 2022. Gas prices hit $5 in June of the same year."
"Almost certainly, a war in the Middle East has a greater effect on oil prices than one in Ukraine. The threat that the Strait of Hormuz could be shut for weeks means that the 20% of the world's crude oil, which is moved by ship, could be off the market for weeks or longer."
"One of the primary reasons people consider EVs is high gas prices. Car Edge explains how high gas prices could change American car-buying habits. 'Electric vehicle sales are sliding in America, and higher gas prices may be the demand catalyst the market needs to survive,' its experts wrote."
Gas prices reaching $5 per gallon represent a significant financial burden for American households, potentially consuming 4% of median annual income. Historical precedent from the 2022 Ukraine invasion demonstrates how quickly crude oil prices can spike, with prices jumping from under $3 to $5 per gallon within months. A Middle East conflict poses greater risks to oil markets than previous conflicts, as the Strait of Hormuz handles 20% of global crude oil shipments. Higher gas prices correlate with increased electric vehicle interest, with Tesla commanding 50% of the US EV market. Despite inflation concerns and economic pressures, EV sales currently face headwinds, though elevated fuel costs could reverse this trend.
Read at 24/7 Wall St.
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