The national average price for a gallon of regular unleaded gasoline has topped $4 for the first time since 2022.
WASHINGTON — The national average price for a gallon of regular unleaded gasoline has topped $4 for the first time since 2022.That price level is relative: A $4 gallon of gas would be welcome in California, Washington state, or Hawaii, where the state averages run north of $5 per gallon; while residents of other states, where the cost of living is lower, are paying under $3.
50 a gallon at the pump.Regardless of the locale, no one's really a fan of sharply rising gas prices.Still, the $4 national average serves as a notable threshold – one that carries psychological, mathematical and mechanical implications for the US economy."This is worrisome, especially for those who have the least ability to weather the storm," said Diane Swonk, chief economist at KPMG.The math behind the estimatesBefore diving into the economic effects of $4-per-gallon gas, it's important to show one's work.Joe Brusuelas, chief economist at RSM US, laid out some of the building blocks of the gas price quantification:Every $10 increase in the barrel of oil: Creates a 0.1 percentage point drag on real GDP growth . Increases inflation by 0.2 percentage points. Raises prices at the pump by 24 cents. Causes a $450 annual hit to household income through related costs like gas, heating and utilities. Leads to higher costs for transportation and food. Oil prices have risen by more than $30 a barrel since the war.A gallon of regular unleaded gasoline averaged $2.98 before the war started.Economic activityA $30 increase in oil prices amounts to about a 0.3 percentage-point knock on real GDP growth . While that's not very big, it tends to add up over time, Brusuelas said.It's not easy to topple a $30 trillion economy – a "dynamic and resilient beast," Brusuelas said."However, even a $30 trillion beast has its pain points," he added.And the point where things could start getting dodgy isn't too far away.When oil prices go above $125 , that's when conversations grow louder about "demand destruction," Brusuelas said. In other words, prices get so high that people change behaviors and don't buy as much.And some consumers are already changing behavior, taking fewer trips if they can and shifting or cutting back on spending, said Swonk.A drop in demand can lead to falling prices; however, the supply of oil has been c
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