Russia, Ukraine, And Gas Prices: How Much Will We Be Paying At The Pump?
PITTSBURGH (KDKA) - Nowhere is the crisis in Ukraine more personal for us Americans than at the gas pump.
Prices are climbing already and there hasn't been a disruption to the flow of oil.
Why is that?
Well, the answer is quite simple, the oil industry is trying to climb out of the pandemic shutdowns and now comes the Russian cloud over our heads.
On the world stage, it's the ultimate example of supply and demand.
"Americans by the way and other global economies buyers are desperate for fuel because economies are recovering," said GasBuddy's Patrick De Haan. "Russia could lash out by saying hey, you know what, we're gonna stop shipping oil because they are the second-largest global producer."
The world will now wait to see how Russia reacts to the sanctions announced by President Joe Biden yesterday.
If they were to lash out, De Haan says their buyers will look for fuel elsewhere and it could be from the source currently filling your pump.
"If Russia curtails shipments, I would hope the president would offset that by making a release from the SPR with no strings attached," De Haan said.
That's what the strategic petroleum reserve is for and De Haan is hoping the president doesn't use it just to lower prices because we won't have anything left in the tank if Russia puts a cork in its pipeline.
"Uncertainty, turmoil, that's exactly what markets hate," De Haan added. "So as long as the price increase is sustained and significant Americans could start feeling it at the pump in as little as 72 hours."
That's right within three days, one thing that does remain on our side is it would hurt Russia to shut off its oil exports.
WATCH: A Jump At The Pump
However, in just about a week, we've seen gas prices at local pumps increase by about a dime-per-gallon.
That climb is far from over.
Part of it is just the seasonal jump in the spring, which according to De Haan, usually brings a 25-75 cent per gallon increase.
"So if you take kind of the middle of the road, increase 50 cents a gallon, and apply that to Pittsburgh's average of 3.67, You're already over $4 And that's not even factoring in Russia," he said.
De Haan expects that by April or May but that assumes Russia does not react to the sanctions.
"Russia could respond with punitive measures to limit oil exports to inflict damage to the European Union," he added.
However, there is a little bit of hope in the potential of a U.S.-Iran nuclear deal that could free up Iran's oil.
"It's only about a million or two million barrels a day," De Haan explained. "It's the optics of the situation, something could potentially offset the risk that we see in Russia. So that's a big deal."
On a positive note, De Haan doesn't believe the pain is permanent.
"You know, I'll take a stab at it and think that we might be back under $4 a gallon by August," he said.
So, in round numbers, 50 cents or more, could put us in the range of $4.20/gallon, which would be a new record.
While $4.00/gallon does seem very certain, $4.20 or more seems dependent on the Russians and the world stage.