Russia's invasion of Ukraine will only add fuel to the fire of high gas prices
Gasoline prices are likely to rise following Russia's actions in Ukraine and the massive sanctions President Joe Biden promised in response. Just how high they will eventually go will depend on Russia’s next moves.
For now, experts say expect $4 a gallon for much of the U.S. by early spring. Some traditionally pricey gas markets, like California and Hawaii, are likely to head past $5 a gallon. Patrick De Haan, head of petroleum analysis for GasBuddy, said a $4 national average is “inevitable” given the current situation.
The increases come as gas was already considered pricey, averaging $3.53 a gallon nationally for regular, up from $2.63 a year ago, AAA reports.
Russia's decision on how much further to push into Ukraine will determine how far allies go with energy-related sanctions, but Russia's decisions aren't the only factors influencing the world market, experts say.
►Russia-Ukraine explained: Inside the crisis as US calls Russian movements an invasion
“All of the ingredients — surging world demand, underperformance within the OPEC cartel, rising inflation for all elements of the petroleum supply chain — will impact prices in the first half of 2022,” said Tom Kloza, global head of energy analysis for the Oil Price Information Service.
Brent crude, the international benchmark, closed just shy of $97 a barrel Tuesday, Bloomberg News reported.
In announcing sanctions against Russia, President Joe Biden sought to offer reassurance that energy prices will stay under control. He said supplies are being monitored for disruptions, and pointed to ongoing coordination with oil suppliers.
►Transcript:: President Biden delivers remarks on U.S. sanctions, Putin's advancements into Ukraine
“This will blunt gas prices. I want to limit the pain to the American people fueling at the gas pump,” Biden said in his address. “This is critical to me.”
Critical or not, a lot could happen to shake up world energy markets. Besides the sanctions announced Tuesday, the Biden administration and its NATO allies could put further restrictions on Russia’s oil exports. While tough on the Russian economy, the pain would be felt both ways.
“If you want to hit Russia as hard as possible in a non-military way, the easiest way is to sanction their oil and gas,” said Troy Vincent. senior market analyst for DTN, a commodity data and research company. But the allies are aware of the consequences for their own economies and “hesitant to take that extreme step,” he said.
Biden did, however, announce that the Nord Stream 2 pipeline is being put on hold, a project that would have brought more Russian natural gas to Western Europe. Since the pipeline wasn’t already in operation, the move has no direct consequence on current supplies.
►Economic impact: Stocks drop after Russia starts invasion of Ukraine.
The administration may also try to make some diplomatic moves that would increase energy supplies. A new accord aimed at limiting Iran’s nuclear weapons program could pump more oil into the world market. Likewise, more natural gas production might be sought from Qatar or other Mideast oil-producing nations.
So what's likely to happen?
“It depends on how the key players react to the situation,” said Margarita Balmaceda, professor of diplomacy and international relations at Seton Hall University and author of “Russian Energy Chains.” “It’s not possible to immediately prognosticate what will be the impact.”
More Russia-Ukraine coverage
'An unmistakable message': Biden unveils US sanctions on Russia after Putin's invasion of Ukraine
Biden's next crisis: Pandemic, insurrection and now a new Cold War?
'The world does not seem to care enough': What life is like in Ukraine as Russia invades
The spark for a wider war?: Why Americans should care about Russia's aggression against Ukraine
The enigma of Vladimir Putin: What do we really know about Russia's leader?
This article originally appeared on USA TODAY: Gas prices will pass $4 after Russia-Ukraine news, despite efforts
