Prices at the pump climbed to their highest level of the year on Monday as oil prices push past $92 a barrel.
Normally, gas prices cool off after the summer driving season ends on Labor Day. But the opposite has happened this year as Saudi Arabia's and Russia's aggressive supply cuts lift oil prices.
The national average for regular gas hit $3.88 a gallon on Monday, the highest price since October 2022, according to AAA. Gas prices have jumped by five cents a gallon in the past week alone.
Rising pump prices are an unwelcome sight for consumers, the Federal Reserve and the White House as they threaten to undo progress on the fight against inflation.
Although the national average is well below the record high of $5.02 a gallon set in June 2022, gas prices are now 20 cents above where they were at this point last year.
Eleven US states now average $4 or higher, including Colorado, Oregon and Arizona, according to AAA. The average price for regular gas in California is now $5.69 a gallon, up by 49 cents in the past month.
In a negative signal for gas prices, the oil market continues to set new highs.
US crude climbed as much as 1.7% on Monday to $92.33 a barrel. It's the first time oil has traded above $92 since November 8, 2022. Brent crude, the international benchmark, hit a fresh 10-month high of $94.95 a barrel on Monday.
In addition to supply cuts, the oil market rally has been driven by the catastrophic floods in Libya and easing US recession fears.
Citigroup warned clients on Monday that geopolitics could push oil above $100 a barrel "for a bit." However, the bank said "$90 prices look unsustainable" and expects US oil prices will drop below $70 a barrel by the second quarter of 2024.
Treasury Secretary Janet Yellen on Monday told CNBC she expects energy prices will "stabilize" and noted gas prices are off their highs from last summer.
Asked if the Biden administration is considering taking action, Yellen noted the president has already released vast amounts of emergency oil from the Strategic Petroleum Reserve.
"We're monitoring the situation very closely," Yellen said.
