Russia's invasion of Ukraine to hit Americans in wallet at gas pump, analyst says

Americans soon will be paying for Russia’s invasion of Ukraine at the gas pump, a petroleum industry analyst said Thursday.

The wholesale price of gasoline already has increased, and stations soon will be passing that on to customers, said Patrick De Haan, head of petroleum analysis for price tracking service GasBuddy.

“Americans could be paying the higher price because of Russia’s incursion as early as right now,” he said. “The increase will likely play out over the course of the next several days. As stations are filling up with the pricier fuel, they likely will slowly raise their prices over the next one to two weeks.”

On Thursday, AAA reported the average per-gallon price of regular gas in Pittsburgh was $3.74 — up about 22 cents from a month ago and 83 cents from a year ago.

In southwestern counties, the average ranged between $3.62 and $3.74.

The national average was $3.55 on Thursday. De Haan said that could rise by 5 to 15 cents per gallon over the next week or two. The impact could be more significant if the situation escalates, he said.

A national average of $4 per gallon is possible by April or May, De Haan said. The record high of $4.10, set in 2008, could be broken in May or June.

President Joe Biden has acknowledged the pain at the pump over the past couple weeks and again Thursday.

“I know this is hard and Americans are already hurting, Biden said. “I will do everything in my power to limit the pain the American people are feeling at the pump.”

While the average price in California likely will exceed $5, De Haan said “apocalyptic” predictions of $6 or $7 per gallon are unlikely to materialize for nearly the entire population. He said an average of $6 also is unlikely in California unless the situation worsens dramatically.

Although wholesale prices already have increased, De Haan said gas stations struggle to raise prices as quickly as they pay them.

“Gas stations will be facing the higher cost immediately today, but it may be difficult for stations to immediately pass that along,” he said. “Oftentimes, that is why gas prices do not come down as quickly as they go up. That’s invisible to consumers. Consumers don’t often see that gas stations can’t raise their prices as quickly as what they pay.”

De Haan said the primary risk is the flow of oil from Russia, the second largest producer globally.

“What happens in Russia could have a profound impact in terms of energy availability and price,” he said.

A concern is that Russia could retaliate against sanctions by limiting oil exports.

“Russia holds a significant portion of global oil production in its hands,” De Haan said. “Should the situation escalate, it’s not impossible that Russia may use oil as a weapon.”

Other factors pushing oil and gas prices up are the switch to more costly summer gasoline mandated by the Environmental Protection Agency, increasing demand as weather warms, and refinery maintenance, De Haan said.

With higher prices for gasoline, diesel and jet fuel, De Haan said higher prices could be seen for airline tickets, the price of anything delivered by truck, and services that rely on gasoline such as Uber, Lyft and Instacart.

“You may see fuel surcharges tacked on on those services in the coming days and weeks, as well as gas prices are likely to stay high,” he said.

Prices could go down relatively quickly if the situation improves dramatically, and oil prices could plummet on any positive development, De Haan said.

“I don’t see a normal decline in gas prices until later this summer or fall,” he said. “Expect prices then to drop potentially anywhere from 10 to 20 cents — not a massive decline.”