Gas prices have steadily climbed higher this year, and Americans are now paying the most at the pump in seven years.
The national average price for a gallon of gas stood at $3.22 on Wednesday, according to AAA, which is the highest since at least October 2014. In some places, consumers are paying much more.
In California, the average price is more than a dollar higher at $4.42. In the state’s Mono County, prices have topped $5.
Rising gas prices comes on the heels of an oil rebound. West Texas Intermediate crude futures, the U.S. oil benchmark, traded around $77.60 per barrel Wednesday, after topping $79 in the prior session for the first time since November 2014. One year ago, a barrel of WTI fetched about $40.
Gas prices approaching $5 a gallon are displayed in front of a Shell gas station on October 05, 2021 in San Rafael, California.
Justin Sullivan | Getty Images
Demand for petroleum products plummeted in 2020 as the pandemic shut economies worldwide, prompting producers to turn off the taps. Though demand has recovered as people hit the road and business activity picks up, supply has remained constrained. Producers have been slow to return barrels to the market, and Hurricane Ida exacerbated the supply and demand imbalance when it knocked production in the Gulf of Mexico offline.
In the face of rising oil prices, some thought the coalition of oil-producing nations known as OPEC+ would opt to increase output. Instead, the group decided Monday to stick to a previously agreed upon schedule to return 400,000 barrels per day to the market in November.
Higher oil prices translates to higher gas prices for consumers, and Americans are paying more than $1 per gallon more than this time last year.
Enjoyed this article?
For exclusive stock picks, investment ideas and CNBC global livestream
Sign up for CNBC Pro
Start your free trial now