The conflict in Ukraine is already impacting gas prices in the United States, as the national average gas price hit $3.54 a gallon compared to $2.65 this time last year, according to the American Automobile Association (AAA) report on Thursday.
Earlier in the week, average prices were $3.51 a gallon, said the AAA.
“Russia is one of the leading oil producers globally, behind only the United States and Saudi Arabia and if they choose to withhold their oil from the global market, such a move would eventually be reflected in higher gas prices for American drivers,” said AAA spokesman Andrew Gross.
Russia provides 10 percent of the global supply of natural gas and oil and roughly 40 percent of the European Union’s.
Analysts say that motorists may expect prices to rise as much as $4 a gallon throughout the United States by early spring due to the Russian incursion into Ukraine, should the conflict drag on.
The last time crude oil prices neared the $4 benchmark in July 2008, average U.S. gas prices peaked at $4.10, due to a strike by Brazilian oil workers and threats to the oil supply from Nigeria and Iran.
American and European sanctions will undoubtedly impact access to that supply due to violence in Ukraine, which a critical transit hub for oil and gas shipments.
President Joe Biden responded on Thursday with the first round of economic sanctions against Russia and threatened more if the Kremlin did not withdraw its forces.
“President Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering,” said Biden.
Biden has sought to reassure Americans that energy prices will stay under control after announcing sanctions against Russia by monitoring supplies for disruptions and by coordinating with oil suppliers.
“We’re closely monitoring energy supply for any disruption, and we’re executing a plan … toward a collective investment to secure stability in global energy supplies,” Biden said.
The administration will take action to “blunt gas prices,” said Biden, who added, “I want to limit the pain to the American people fueling at the gas pump … This is critical to me.”
Biden said he will also impose sanctions on Nord Stream 2 AG and Matthias Warnig, the German CEO of the $11 billion pipeline that connects Russia and Germany.
The White House said that it hoped that a resolution to the crisis will help return oil and gas prices to typical levels.
At the market’s opening on Thursday, the price of Brent crude oil, used to refine gasoline, heating oil, plastics, and other petroleum products, skyrocketed above $105 a barrel for the first time since 2014.
In 2014, U.S. gasoline prices ranged from $3.50 to $3.85 a gallon.
Oil prices finally settled at the end of closing at $99.41 a barrel after a day of volatility on the world stock markets.
Although the United States is the largest producer of crude oil and natural gas it is also the world’s largest consumer, producing over 18.6 million barrels a day while using over 20.5 million.
The United States imported 8.5 million barrels of crude daily last year, to make up for the deficit.
In November 2021, about 595,000 barrels per day, or roughly 7 percent of U.S. imports came from Russia, making it the third largest foreign source after Canada and Mexico.
The sanctions against Moscow could reduce the availability of Russian crude in the United States and cause prices of gasoline and petroleum products to rise as distributors look elsewhere.
For now say some experts, the Ukrainian crisis will not likely pose a major risk to America’s economy, but potentially elevated gas costs in the United States may pale in comparison to higher costs for its European allies with a heavy dependence on Russian oil and gas.
U.S. consumers may face an energy price shock, as two in ten Americans or 20.7 percent said in late January and early February, that they weren’t able to pay an energy bill in full over the past 12 months, according to ongoing research from the Census Bureau.
This is a slight increase from the 20.1 percent who said the same in late July and early August.
Meanwhile, year-over-year price inflation reached 7.5 percent in January, according to the Consumer Price Index.
Energy costs have outpaced the average, with a 27 percent year-over-year increase in the gauge’s energy index, which includes the cost of electricity, fuel oil and utility gas service.
The price of gasoline alone has increased 40 percent from a year earlier, according to data from the index.
Eligible households can defray their overall energy costs if prices go up by applying for assistance through programs like the Low Income Housing Energy Assistance Program.
“For a lot of families, it couldn’t come at a worse time,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association (NEADA), which represents the state programs that carry out the federally-funded Low Income Housing Energy Assistance Program.
Congress earmarked $4.5 billion for the program in the $1.9 trillion American Rescue Plan on top of the normal appropriations.
More than 21 million American households are behind on their bills and owe a national projected average of $1,060, according to the agency.
In addition, the end of yearly moratoriums that halt shut-offs in cold weather states during the winter in March is fast approaching.
“There’s a lot of things coming together that are not good,” said Wolfe. who said that families in the program typically owe around $12 billion at the close of winter.
At the end of 2021, low income consumers owed an estimated $22.2 billion in utility arrears, an increase from $20.1 billion at the end of 2020, according to the NEADA, while past due utility bills peaked around $30 billion in March 2021.
There is still “enough to get a lot of people back on track,” said Wolfe, but he added, “We weren’t expecting this. We weren’t expecting another bad news cycle.”