What the Ukraine Conflict Means for Gas Prices

What+the+Ukraine+Conflict+Means+for+Gas+Prices

While the Ukrainian conflict is inflicting a devastating hit to millions of European lives and economies, it is also impacting American energy costs. It appears that Russia’s invasion of Ukraine could raise gasoline prices to $5 or even $6 per gallon in the near future. 

According to the U.S Department of Energy, Russia’s the third largest producer of oil (behind the United States and Saudi Arabia).

Because of Russia’s large role in the world’s energy, the United States and its NATO allies are not so keen to impose energy sanctions on Russia. However, Russia has increased prices on exports as a result of military spending.

Just last December the price for a barrel of oil was $69. Today, it is $91. 

“With inflation in the U.S. already high by recent historical standards, this just makes life more expensive for everyone” said public policy professor at Oregon State David Bernell. 

Bernell says if US and NATO sanctions increase–or if President Vladmir Putin turns off our importing oil–prices will only increase from there.

Gasoline prices have already risen due to the inflation this past year, and today they are averaging at $3.60 per gallon. That has increased $0.90 from last year.

Diesel prices are also increasing, which impacts transportation and increases fuel charges for shipping and online goods. AAA reports that diesel prices are now averaging $4 nationwide–an increase of 37% from last year. 

The last time American gas prices increased by more than $4 was during the 2008 recession. 

Because of rising fuel prices, state lawmakers are proposing to temporarily disable federal and state gasoline prices. In President Biden’s State of the Union speech on March 1, he announced that he wanted to “blunt” gas prices for Americans. 

“I’m taking robust action to make sure the pain of our sanctions is targeted at the Russian economy, and that we’ve used every tool at our disposal to protect American businesses and consumers,” President Biden said.

Biden proposed that he is working with 30 other countries to release 60 million barrels of oil around the world from reserves.  America will lead the effort by releasing 30 million barrels and will release more if its allies deem necessary.

When the history of this era is written, Putin’s war in Ukraine will have left Russia weaker and the rest of the world stronger”

— Joe Biden

Gov. Gavin Newsom, D-Cal, proposed a modest solution to the gasoline problem. Because the federal tax on gasoline is said to increase by $0.03, he moved to pause the federal tax for one year.

“When the history of this era is written, Putin’s war in Ukraine will have left Russia weaker and the rest of the world stronger,” President Biden said.