The factors contributing to increasing gas prices include Russia, pandemic and more
You may have noticed that gas prices have increased significantly since Russia invaded Ukraine last Thursday, and that is no coincidence.
As of today, crude oil prices have reached over 110 dollars per barrel. I spoke with the head of petroleum analysis at GasBuddy, Patrick De Haan, who says that Russia’s attacks are to blame for the price increase.
Due to Russia’s continuous attacks on civilians in Ukraine, many countries, including the US have punished Russia with economic sanctions which has unfortunately let to higher gas prices back home, since Russia produces a large amount of the global oil supply.
On Tuesday, the International Energy Agency announced that 31 countries will be releasing 60 million barrels soon. De Haan says that amount is not nearly enough to keep up with Russia’s losses.
“60 million barrels is only six days of typical oil production from Russia, so it’s very insignificant given the global implications. If the IEA were to release 100 or 150 or even 200 million barrels, that would probably have more of an effect. But 60 million barrels is quite disappointing.”
According to De Haan, Russia is not the only factor contributing to high gas prices.
Sanctions against Russia from around the world have made a significant increase in the cost of crude oil. Luckily, the US does not heavily rely on Russian oil. According to the American Fuel and Petrochemical Manufacturers Trade Association, the US only imports around three percent of its crude oil from Russia.
Despite the seemingly small amount of oil, since Russia produces a large amount of the world’s oil, the sanctions are hurting the overall global supply. And these sanctions are hitting at the worst possible time for Americans.
De Haan says that gas prices have steadily increased due to fallout from the pandemic and higher prices are expected at this time of year. As winter ends, there is an increased demand for gas, and De Haan says that summer gasoline is more expensive.
While many blame President Biden for increasing prices, De Haan says that it’s mostly a mixture of every factor mentioned above. When asked if the prices would be lower if a different party were in the White House, De Haan says there could be a difference in prices, but it’d be insignificant.
“I think gas prices would be similar under a republican or democrat, because much of this is induced— much of this inflation is coming from the pandemic and the imbalances that create it,” said De Haan.
Will these prices go down any time soon? According to De Haan, it’s highly unlikely.
“I think we’re on the road to four dollars a gallon and potentially on a road to the record.”
He continues to say that the future of gas prices will likely continue to rise.
Since there are multiple factors to these high gas prices, including sanctions against Russia, pandemic recovery, seasonality and increased demand; gas prices are expected to rise even if sanctions were to end within the next few days.
“If things or to suddenly resolve tomorrow, four dollars per gallon would still be on the table. There would be some level of improvement, but the longer that this continues, the more oil production is going to be impacted; and it’s going to be harder to catch back up.
He continues to say that if the attacks on Ukraine and sanctions against Russia continues for another month or so, it will take much longer for oil prices to get back down because of the amount of catching up that is required to refill the global oil supply.
If you’d like to avoid paying so much at the pump, De Haan advises motorists to limit their usage if possible and to continue looking for those cheaper prices. You can check out the lowest prices in Michiana here.