Here’s what Russia’s conflict in Ukraine could mean for US fuel, energy prices

Gas prices have ticked up slightly in the past month and are still nearly $1 higher than a year ago. The conflict in Ukraine is increasing concerns about energy costs this year.

  • Experts predict gas could hit $4 a gallon this summer, even if Russia doesn’t attack Ukraine.
  • Russia is behind only Saudi Arabia as the world’s largest oil exporter.
  • Sanctions on Russia for a Ukraine incursion could ramp up prices as we head toward driving season.

If you think gasoline prices are already too high this year, brace yourself for an even bigger shock.

That’s because more drivers are expected to hit the road as the omicron variant fades and the spring driving season arrives. Prices are expected to rise even more if war breaks out in Ukraine or if U.S.-led countries slap heavy sanctions on Russia

“There’s a lot lurking in the oven and not a lot for the advantage of the consumer,” said Patrick De Haan, head of petroleum analysis for GasBuddy.

A gallon of regular gas averaged $3.34 in AAA’s daily survey Wednesday. While that was up only a nickel a gallon from a month ago, it’s up 94 cents from a year ago when the COVID-19 pandemic was taking an even larger toll on the economy.

It doesn’t help, either, that other energy prices are rising on commodities markets:

  • The benchmark U.S. crude for February delivery rose $1.93 a barrel Tuesday to $88.20, the Associated Press reported.
  • Heating oil futures for February delivery rose 4 cents to $2.67 a gallon.
  • Natural gas was up, by 2 cents to $4.05 per 1,000 cubic feet. Prices were rising for energy futures Wednesday as well.

The prospect is grim for motorists.

De Haan and another respected price watcher, Tom Kloza, global head of energy analysis for the Oil Price Information Service, both independently predict $4 a gallon gas prices nationally by Memorial Day, traditionally the kickoff weekend to summer. And that’s if Russia doesn’t unleash an attack on Ukraine before then.

In that case, “all bets are off,” Kloza said.

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Just how much prices would rise in event of war is uncertain. But with Russia being second only to Saudi Arabia as the world’s largest oil exporter, President Vladimir Putin certainly could pull back on shipments to retaliate if the U.S. and allies were to slap on heavy sanctions for a Ukrainian incursion.

“You would think that if Putin behaves like the thug many people think he is, sanctions would probably mean 2 million barrels a day would have to be rerouted,” Kloza said. “It’s a no-win situation if you go to deep, deep sanctions.”

Prices vary widely by state. They range from $2.98 a gallon in Kentucky to $4.64 a gallon in California, AAA says. Starting in about a month, refineries will start switching back to their warmer-weather blends, which are more complicated and costly to make.

“Drivers should anticipate prices to continue to rise, especially as we get to spring driving season,” said Devin Gladden, spokesman for AAA.

If there’s any good news, it would be knowing prices, even as high as they are now, could be higher. The upsurge in COVID-19 cases, spurred by omicron, has resulted in many workers stuck at home again, unable to go into their offices, thus dampening enthusiasm for driving. So has a run of cold weather in the Northeast.

De Haan said prices were about 10 cents a gallon higher in November. They will have a long way to go to beat the record of $4.11 a gallon set in 2008. Even if it were to happen, prices would have to hit $5.32 a gallon to match the record when adjusted for inflation.

“We’ll have to see how things go from here,” he said.

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