Gas prices hit $4.23 per gallon, a new high for the year

The surge in oil prices has compounded typical price increases seen at this time of year, as refineries undergo maintenance and the spring-summer driving season begins to get underway.

Many gas stations have also sought to artificially keep prices below the $4 threshold by reducing their own profit margins, said Tom Kloza, chief energy adviser at Gulf Oil. But they can’t sustain lower margins for a while, he said.

“This is the most severe squeeze, in terms of margin suppression, that we have seen for retailers since 2020,” he said.

In a report whose data was largely compiled before the recent crisis, Bank of America analysts found that so far only low-income households were seeing a significant impact on their budgets from rising gasoline prices. And despite the surge in prices, households still spend less of their budget on gasoline than during the peaks observed in 2008, 2011 and 2012.

At some point, however, these safety margins will begin to erode – especially if fuel costs rise for essential household goods.

“A much greater risk emerges if rising gasoline and oil prices spill over into other necessities such as grocery and utility prices – although so far there is little evidence of this,” the analysts write.

They added: “While it is possible for some to ‘get over’ an oil shock by relying more on credit card borrowing, this appears somewhat limited, particularly for lower-income households,” they wrote.

Consumer confidence remains moderate. On Tuesday, the Conference Board reported a slight rise in its main index, likely linked to the Iran ceasefire announced earlier in the month, which sent stock prices to record highs.

However, the index remains well below its pre-pandemic levels and the numbers seen in the weeks following President Donald Trump’s second election victory in November 2024.