Gasoline prices nudged above $5 per gallon of regular, based on the national average, two weeks ago. They have backed down slightly, but many analysts believe this is temporary.
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Oil prices have fallen from $122 a barrel early in the month to $110, partly due to a belief that a recession will reduce demand. That may be true, but the pressure likely will continue to be primarily on the demand side. Nothing of substance has changed about Russian crude exports and the effect they have on prices since the war in Ukraine began. While India and China may be customers for Russian oil, it has become increasingly scarce in Europe. Even as the United States has released oil from its Strategic Petroleum Reserve, prices were unaffected.

The conflict in Ukraine will not end for months, or perhaps years. In the meantime, the sanctions against Russia, particularly the purchase of its oil, will continue.

The oil producers of the Middle East have signaled they will not replace the Russian supply. Oil-rich Venezuela and Mexico have aged production and transportation infrastructures. Even if sanctions against Venezuela were lifted, the country may not be able to ramp production until well into next year.

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It is not clear, and never will be, when gas prices will overwhelm many Americans entirely. Certainly, $5 gas has crippled the household expenses of drivers from poor families, and perhaps some that are middle class. The price will not matter to rich Americans, so it is the families in the middle financially who are at risk of losing much of their discretionary income. If this happens, they will no longer be consumers beyond basic necessities. Gross domestic product will be hit, and probably hard.

Note that middle-class families also have to deal with rising interest rates and perhaps falling home prices.

While $6 gas seemed impossible a year ago, another geopolitical flare-up, or the worsening of the one in Ukraine, easily could push prices to that level.

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