(The Center Square) - California gas prices climbed as high as $6 a gallon as oil prices skyrocketed ahead of President Donald Trump's deadline on Iran to reopen oil trade routes in the Strait of Hormuz.
Prices rose in the Southwest before Trump on Tuesday evening announced a two-week ceasefire with Iran.
With an average price of $5.93 a gallon, California continued to be well above the national average, with one motorist in Anaheim paying $44.09 for 7.35 gallons of regular gas Sunday, or $6 per gallon.
Nevada, which buys its gasoline from California oil refineries, passed the $5 threshold by a penny and edged closer to its 2022 record of $5.68. Arizona reached $4.75 as Colorado stayed below $4 with an average of $3.81 a gallon. All of the prices are averages reported by AAA.
The record-breaking high for the national average was $5.02 in June 2022, shortly after the Russia-Ukraine war began and as the COVID-19 pandemic was ending. The current average of $4.14 is up over a dollar from immediately before the conflict with Iran started on Feb. 28.
“In the Southwest, it's a little bit more of a dire straits situation when it comes to the prices at the pump,” said GasBuddy Petroleum analyst Matt McClain.
“We are going to continue to see price increases irrespective of what happens tonight,” McClain told The Center Square.
“But if the president goes through on his threats, it's record territory," he said before Trump announced the cease-fire with Iran.
In Colorado, where prices are lower than the national average of $4.14 a gallon, consumers have seen an increase of about 50 cents a gallon since one month ago.
“Colorado has still had a substantial jump [in price],” Auto Club Group Spokesperson Skyler McKinley in Colorado told The Center Square. “The floor was lower in part because of competition within the local gas markets, among other considerations.”
McKinley said that while regular gas increases were worth paying attention to, current diesel prices were potentially more notable for consumers. “By all accounts we’re on track to set a new diesel record in the United States."
Nationally, a gallon of diesel hit $5.65 Tuesday, up over $1 since the U.S.-Israeli conflict with Iran started. The per-gallon record for diesel was set in 2022 at $5.82. In California, diesel was already at an all-time high of $7.73. McClain speculated it could soon approach $8 in the state.
While few Americans drive diesel-fueled cars today, the price of diesel indirectly impacts consumers through the price of transported goods.
“Literally everything that we have on a store shelf arrives either by barge, by semi tractor trailer, or train – and all three of those utilize diesel to get from point A to point B,” said McCain “That factors into the end price that we consumers pay for everything – groceries, clothing, your favorite online store.”
McCain said some consumers had already begun to feel some of those diesel price increases in daily life. “It's going to hit those perimeter of the grocery store [items] first, because the fresh produce, perishable items, never-frozen meats and dairy require more frequent shipments, so they're more sensitive to those shipping [costs].”
The U.S. could continue to see higher gas prices in the coming months, even as very little of the country’s oil supply comes from Iran or the Middle East, according to industry experts.
As a global commodity, the trading price of oil is impacted by its global demand and supply, with countries across the globe already experiencing shortages as a result of Iran’s stranglehold on the Strait of Hormuz. This has been felt hardest in Asian countries, said McClain.
If the Iranian government opens the Strait of Hormuz, relief at the pump could be slow.
“I see it as kind of a one-two punch – a slight decrease, and then it will take, weeks and months, to get it back down to something that's more palatable,” said McClain.
The stop on oil tankers leaving the Strait of Hormuz means that when the floodgates reopen, the large ships could take a long time to reach across the globe. At 13-17 knots (15-20 mph), oil tankers move at roughly the speed of a bicycle, according to maritime publisher Marine Insight.
“There's no easy way to unravel what you've got going on in," said McClain. "It's going to take weeks and weeks, or more than likely actually months and months, for prices to get back down to where we were prior."
