Gas prices have been driven higher by crude oil supply curbs by Saudi Arabia and Russia.

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Falling leaves typically coincide with falling gas prices as the summer driving season comes to a close and demand at the pump wanes. Instead, gasoline prices are getting more expensive and are just pennies away from their highest level so far this year.

That’s because aggressive oil supply cuts in Saudi Arabia and Russia and deadly flooding in Libya have sent crude prices on a tear. Oil prices hit a 10-month high on Friday and are on pace to hit their largest quarterly increase since Russia first invaded Ukraine in the beginning of 2022.

Increasing oil prices are a bad omen on Wall Street — they mean higher inflation and introduce the possibility of more economy-crushing interest rate hikes by the Federal Reserve. More pain at the pump also means less consumer spending elsewhere and a heightened possibility of recession.

There’s already a lot to fret about this autumn: Auto workers are on strike, the federal government could face another shutdown, China’s economy is still distressingly subdued and geopolitical tensions are on the rise.

Are rising oil prices another item to add to the list?

David Kelly, chief global strategist at JPMorgan Asset Management and self-declared worrywart, doesn’t think so.

Before the Bell spoke with Kelly about why Americans don’t have to fear the pump, at least right now.

This interview has been slightly edited for length and clarity.

How high do you think oil prices will go?

David Kelly: If there’s some other shock, some big storm in the Gulf of Mexico, it could spike higher. But as we look at this, we don’t think the trend over the next year or two is going to be higher oil prices.

There are a few reasons for this.

One thing we need to remember is that the price of everything has gone up, and all of the input costs of producing oil have increased. Sure we’re at $90 a barrel right now — but if you measure by today’s dollars, we actually peaked at something like $184 per barrel back in 2008. When you adjust for inflation, oil isn’t that high right now.

Another thing is that the US has whittled away its Strategic Petroleum Reserve, we’ve reduced that a lot. There was an inventory overhang we could use to try to balance the market, and it’s not as big as it was.

Going forward, US production is growing very rapidly — we’re currently producing more crude oil than either Russia or Saudi Arabia. This is going to be a record year for US liquid fuel production, and next year is going to be even stronger.

The global economy is growing slowly, and that’s going to limit demand growth for fossil fuel energy. And frankly, the green energy transition is also limiting the growth in demand.

So when I look at the supply side I think the US and other non-OPEC members will help, and when I look at the demand side, I don’t see a lot of economic growth or demand for fossil fuels. So I don’t expect economic trends to push prices much higher, although of course some shock could.

Why are oil prices so connected to recession?

Expensive oil has a very nasty triple effect of pushing up inflation and sometimes forcing a tighter monetary policy at the very time that it’s squeezing the ability of consumers to spend elsewhere.

You saw that most obviously in the 1970s … when high gasoline prices meant people had less money to spend on other stuff, and meanwhile, the Federal Reserve pushed rates up too high to fight inflation. That’s why oil caused a recession in 1974-1975 and caused double barreled recessions in 1980 and 1982. The Great Financial Crisis in 2008 was not about oil, but consumers were in a weakened position going into it because of all the money they were spending on gasoline. These are all reasons why Americans have come to fear a spike at the gas pump.

What do elevated oil prices mean for inflation and future rate hikes by the Federal Reserve?