Oil down, but gas prices race back near record highs

Prices at the pump are once again flirting with record highs. That's adding to inflationary headaches for families, the US economy and the White House.

The national average for regular gasoline rose to $4.328 a gallon on Monday, according to AAA. That's a fraction of a penny shy of the all-time high of $4.331 set on March 11.

Gas prices have climbed 13 cents over the past week and stand well above the recent low of $4.07 a gallon.

Prices at the pump were already high heading into 2022 as supply failed to recover from Covid-19 as fast as demand. Russia's late February invasion of Ukraine sent them surging much higher as investors braced for oil supply disruptions caused by the war and embargoes on Russian energy.

The Biden administration responded by unleashing a record amount of oil from US emergency oil stockpiles, a step that helped cool oil and gasoline prices off.

But as industry analysts warned at the time, the relief from the emergency oil releases was fleeting and relatively minor. The national average for regular gas today is about 23% higher than the day before the invasion of Ukraine.

The recent jump in pump prices may not be done.

Gasoline futures settled at record highs on Friday. Andy Lipow, president of Lipow Oil Associates, told CNN he expects retail prices will climb by another 18 to 20 cents over the next 10 to 14 days, hitting a fresh record of $4.50 a gallon.

Although nominal gas prices are near record highs, inflation-adjusted prices are not. The national average would need to climb above $5.30 a gallon to beat the inflation-adjusted record set in 2008, according to the US Energy Information Administration.

Nonetheless, high gas prices are contributing to Americans' dismal views on the economy. Only 23% of them rate economic conditions as even somewhat good, down from 54% last April, according to a CNN poll released last week.

That's the lowest since November 2011. And just 34% of Americans approve of President Joe Biden's handling of the economy.

In another blow to the inflation outlook, diesel prices are spiking.

The national average for diesel hit another record of $5.54 a gallon on Monday, up 22 cents in a week and 49 cents in a month, according to AAA.

The good news is that the oil market, which sets the pace for gasoline and diesel, is taking a breather. Oil prices fell sharply Monday.