‘The increase will likely play out over the next several days’ -- Impacts of Russian invasion on gas prices
LANSING, Mich. (WILX) - Patrick De Haan, head of petroleum analysis for GasBuddy, addressed the impacts of the Russian invasion of Ukraine on local gas prices. He says, with Russia now out as a supplier of fuel for much of the world, gas stations will have to buy fuel from remaining suppliers at a higher price.
De Haan said, “The primary risk in this situation is Russia’s oil flow. It is the second largest, borderline third largest oil producer globally, and so what happens in Russia could have a profound impact in terms of energy availability and price.”
It’s already reflected in the current price per gallon.
“Gas stations are raising their prices to reflect the increase in cost,” he said. “So Americans could be paying the higher price because of Russia’s incursion as early as right now. The increase will likely play out over the next several days, as stations are filling up with the pricier fuel. They likely will raise their prices over the next one to two weeks.”
Russia is aware of the discomfort the rest of the world will experience because of the fuel situation. In fact, it’s used it as a bargaining chip in the past.
“Russia controls a significant amount of the world’s oil, so, it’s not impossible that Russia will use oil as a weapon,” he said. “The backdrop to that is that Russia already used natural gas as a weapon last fall. The Germans delayed the approval of the Nord Stream 2 pipeline, which caused Russia to immediately curtail and eliminate temporarily natural gas shipments to Europe.”
Companies that require oil to operate may add new charges based on the shortage. Uber, Instacart, trucking companies, airlines and more could add oil charges to help recoup the cost increase they’re anticipating.
According to De Haan, Russia produces 10 million barrels of oil per day, while the United States has about 582 million barrels of oil in it’s Strategic Petroleum Reserve (SPR.) That means the US has some ability to cover the absence of Russian oil, just not forever.
“There is the possibility that the president could utilize the nation’s strategic petroleum reserve,” De Haan said. “It’s unknown at this point if President Biden will utilize the SPR, but it would likely need to be a sizeable release.
De Haan believes that, at least for the near future, gasoline priced at five dollars per gallon is possible. But that’s where he sees the price rise stopping.
“I do not expect anywhere, aside from California, to see anywhere remotely close to six dollars,” he said. “Even in California the six dollar mark is likely not to be hit in terms of an average.”
Saving money: How to reduce your financial clutter
Copyright 2022 WILX. All rights reserved.
Subscribe to our News 10 newsletter and receive the latest local news and weather straight to your email every morning.