Gasoline was already heading to $4 a gallon as crude oil prices steadily increased in recent months, and this week’s Russian invasion of Ukraine will accelerate the rise, an oil analyst said Thursday.
“We’ll have $4 gasoline by St. Patrick’s Day,” said Tom Kloza, the global head of energy analysis for the Oil Price Information Service.
That’s the nationwide average. Pennsylvania, with one of the nation’s highest fuel tax rates, will hit the $4 threshold before most other states with lower tax rates.
Before the invasion, AAA reported Wednesday that Pennsylvania’s average gas price was $3.73 a gallon, up 3 cents in the last week. New Jersey’s was $3.61, unchanged. Pennsylvania’s price was up about 4% in the last three months, from $3.59 at Thanksgiving.
Russia is a big exporter of oil, natural gas, and refined fuels, and its primary market is Europe. U.S. oil refiners do not import a lot of Russian products, Kloza said.
“We’re not all that dependent upon Russian fuel and Russian products,” Kloza said. “It’s not a big deal. But Europe is so dependent on crude oil and refined products and natural gas from Russia that if it gets impacted or suspended, blocked in any way, it’s a big deal.”
“Europe desperately needs Russian hydrocarbons,” he said.
The U.S. became a net exporter of petroleum in 2020, the culmination of a gradual buildup of domestic production from shale oil regions in the center of the country. And so it is less dependent upon imports than it was during the 1970s and 1980s.
Still, Russia accounted for 7% of petroleum imports to the United States in 2020, according to the U.S. Energy Information Administration (EIA). That included crude oil and refined products, as well as some intermediate products that U.S. refiners are able to convert into higher-value motor fuels.
Some Russian products are purchased by PBF Energy refinery in Delaware City, Del., and a smaller amount goes to Monroe Energy’s refinery in Trainer. Other Russian exports went to Gulf Coast refineries and to Washington State.
Any disruptions of energy to Europe would impact global energy prices, affecting consumers worldwide whether they consume Russian products or not.
Oil analysts have noted that the sanctions imposed by the Biden administration and other nations have avoided impacting the Russian energy sector and are primarily aimed at financial flows, though that could seriously impact European companies that are working in Russian’s energy industry.